Rural Households' Allocation of Remittance Income in Agriculture in Nepal

Abstract

This paper examines the uses of remittances in various household activities by remittance-receiving households in rural Nepal. Specifically, this paper focuses on the allocation of (a) remittances in agriculture and other dimensions of household activities, and (b) whether there is any association between the amount of remittances received and the amount allocated by households to agriculture and other dimensions. This study utilizes the detailed household level data (n=139 remittance-receiving households) collected from the Chitwan Valley in 2014, a rural migrant-sending setting of southern Nepal that collected remittances received by households and remittance used in various household activities with monthly precision in the past 12 months. Using the multilevel multivariate OLS regression, the results showed that of the total amount of remittances used, farming (e.g. purchase of seeds, fertilizers, and pesticides) received only about 3.1 percent. In contrast, a large proportion of remittance was used in buying fixed assets such as land, houses, and jewelry (27.1%), followed by food and vegetables (15.3%), savings and business investment (12.3%), loan payment (11.0%), education, (11.2%), and health (4.1%). Adjusted results from multivariate analysis (multilevel OLS) showed that the amount of remittances received by households was not significantly associated with its use in farming. However, the amount of remittances received was positively associated with the amount used in buying fixed assets, media (electronic) items, clothing, covering cultural expenses, paying utilities, and repaying debt. Implications from the findings are presented.