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Environmental migration and labor markets in Nepal

Research output: Working paper

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Abstract

While an emerging literature cites weather shocks as migration determinants, scant evidence exists on how such migration impacts the markets of receiving communities in developing countries. We address this knowledge gap by investigating the impact of weather-driven internal migration on labor markets in Nepal. An increase of 1 percentage point in net migration reduces wages in the formal sector by 4.8 percentage points. The absence of wage effects in the informal sector is consistent with the exit of low-skilled native workers from the labor market. Understanding entrepreneurial constraints and drivers of labor market exits will inform pathways to resilience.