Impact of Remittance on Income Inequality and Poverty Reduction in Nepal

Labor migration is the international phenomena. From the economic perspective, it is very good source of remittance which has significant contribution in the development and change of Nation. Nepal has also trend of youth migration. The remittances to GDP ratio increased from 10.7 percent in 2001 to 13.8 percent in 2007 and further to 29.1 percent ($6.6bn) in 2015, putting Nepal among the top five recipients in terms of size of the economy. Regarding the importance of remittance, the study aim is to measure the impact of remittance on income inequality and poverty reduction in Nepal. The study was done in three districts covering the 385 remittance receiving household through purposive sampling. The result shows that the remittance has contributed 35.6% in total expenses of remittance receiving household whereas there was only 2.3% contribution made by non-remittance. So, it can be claimed that there is significant contribution of remittance in poverty reduction. The main contribution of remittance is to enable the access of poor to health and education through the improvement their economic status.