Impact of COVID-19 on Remittance-Poverty Dynamics in Nepal

Bhatta, Siddha Raj (2020): Impact of COVID-19 on Remittance-Poverty Dynamics in Nepal. Published in: SANEM International Development Conference (SIDC) 2020

Abstract

This paper estimates the potential short-term economic impact of remittance shocks created by the COVID-19 on poverty dynamics of Nepal. The estimates are based on a number of scenarios: contractions in remittance flows by 5 to 40 percent depending on the severity of the crisis. It has explored the geo-spatial differences in the impact of such shocks and estimated the impact of shocks in domestic as well as international remittances. The results show that decline in remittances could increase the poverty rate measured at national poverty line by 0.87 to 2.65 percentage points under moderate shocks and by 3.62 to 7.53 percentage points under the pessimistic scenario. In case the lower quintile groups face larger shocks in remittances, poverty rate could increase by an additional 0.8 to 2.35 percentage points. Such vulnerability warns that remittance shocks could reverse the progress made in poverty reduction in the past decade. Translating poverty rate into numbers, remittance shocks could push 1.2 to 2.5 million Nepali below the poverty line if further measures are not taken. The results also show that shocks in international remittances are more influential in poverty reduction as such any decline in such remittances could raise poverty rate far higher than the shocks in domestic remittances. These results points towards the challenge created by COVID-19 in alleviating absolute poverty by 2030 and indicate towards the need for increasing social security for the vulnerable groups.

• Item Type: MPRA Paper
• Language: English
• Keywords: Poverty, COVID-19, crisis impact
• Subjects: I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I32 - Measurement and Analysis of Poverty

References

Abdelhadi, S. A., & Bashayreh, A. (2018). The effect of remittances in poverty reduction: The case of Jordan.

ACAPS. (2020). https://www.acaps.org. Retrieved from https://www.acaps.org: https://www.acaps.org/special-report/nepal-covid-19-return-migrants

Acharya, C., & Leon-Gonzalez, R. (2013). The Impact of Remittance on Poverty and Inequality: A Micro-Simulation Study for Nepal. Asian Journal of Empirical Research, 1061-1080.

Achrya, C. P., & Leon-Gonjalez, R. (2013). The Impact of Remittance on Poverty and Inequality: A Micro Simulation Study for Nepal. Asian Journal of Empirical Research , 1061-1080.

Adams, R. S., & Page, J. (2005). Do International Migration and Remittances Reduce Poverty in Developing Countries? World Development , 1645-1649.

Asep, S., Ridho, A. I., & Daniel, S. (2020). Estimating the Impact of Covid-19 on Poverty in Indonesia. Bulletin of Indonesian Economic Studies, 1-19.

Brookings Institutions. (2020). https://www.brookings.edu. Retrieved from https://www.brookings.edu: https://www.brookings.edu/blog/future-development/2020/05/06/turning-back-the-poverty-clock-how-will-covid-19-impact-the-worlds-poorest-people/

Buheji, M., & Cunha, K. (2020). The Extent of COVID-19 Pandemic Socio-Economic Impact on Global Poverty. A Global Integrative Multidisciplinary Review. American Journal of Economics, 213-224.

CBS. (2011). Nepal Living Standard Survey 2010/11. Kathmandu: Central Bureau of Statistics, Nepal.

Chei, B., Gloria, E., Millicent Abigail, A.-A., & Isaac Christopher, O. (2020). Impact of COVID-19 on poverty and living standards in Ghana: A Micro Perspective. Research Square , 1-26.

Devkota, J. (2014). Impact of Migrants’ Remittances on Poverty and Inequality in Nepal. Forum of International Development Studies, 1-15.

Devkota, S., & Upadhayay, M. P. (2014). Impact of remittance on poverty and inequality in Nepal: Evidence from three rounds of the NLSS survey. Himalayan Journal of Development and Democracy, 1-25.

FAO. (2020). COVID-19 and rural poverty: Supporting and protecting the rural poor in times of pandemic. Rome: FAO.

IFRI. (2020). Assessing the Impact on Household Incomes and Poverty of Declines in Remittances Due to COVID-19. Myanmar: IFRI.

ILO. (2020). COVID-19: Protecting workers in the workplace. Retrieved March 18, 2020, from https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_738742/lang--en/index.htm

ILO. (2020). ILO Monitor: COVID-19 and the world of work. Geneva: ILO.

IMF. (2020). Confronting the Crisis: Priorities for the Global Economy. Retrieved June 8, 2020, from https://www.imf.org/en/News/Articles/2020/04/07/sp040920-SMs2020-Curtain-Raiser

Kikoni, E., & Schiffbauer, M. T. (2020). The Economic and Social Impact of COVID-19 : Western Balkans Outlook. Washington D.C.: World Bank.

Kumar, B. (2019). The Impact of International Remittances on Poverty Alleviation in Bangladesh. Remtitance Review, 67-86.

Lokshin, M., Bontch-Osmolovski, M., & Glinskaya, E. (2007). Work Related Migration and Poverty Reduction in Nepal. WB Working Paper Series, 1-59.

Mahler, D. G., Lakner, C., Aguilar, R. A., & Wu, H. (2020). The impact of COVID-19 on global poverty: Why Sub-Saharan Africa might be the region hardest hit. Retrieved June 8, 2020, from https://blogs.worldbank.org/opendata/impact-covid-19-coronavirus-global-poverty-why-sub-saharan-africa-might-be-region-hardest

Nepal Rastra Bank. (2020). Current Macroeconomic and Financial Situation . Kathmandu : Nepal Rastra Bank .

Oxfam. (2020). Half a billion people could be pushed into poverty by coronavirus. Retrieved June 8, 2020, from https://www.oxfam.org/en/press-releases/half-billion-people-could-be-pushed-poverty-coronavirus-warns-oxfam

Saini, S. (2020, April 30). Financial Express. Retrieved September 22, 2020, from https://www.financialexpress.com: https://www.financialexpress.com/opinion/covid-19-may-double-poverty-in-india/1943736/

SANEM. (2020). SANEM researchers assess poverty impacts of COVID-19. Retrieved from SANEM Website: http://sanemnet.org/sanem-researchers-assess-poverty-impacts-of-covid-19/

Sumner, A., Hoy, C., & Ortiz-Juarez, E. (2020). Estimates Of The Impact Of Covid-19 On Global Poverty. WIDER Working Paper 2020/43. Helsinki: UNU-WIDER.

UNDP. (2020, June). https://www.undp.org. Retrieved from https://www.undp.org: https://www.undp.org/content/undp/en/home/news-centre/news/2020/Pakistan_pandemic_could_push_millions_into_poverty.html

UNESCAP. (2020). COVID-19 and South Asia: National Strategies and Subregional Cooperation for Accelerating Inclusive, Sustainable and Resilient Recovery. DC: UNESCAP.

Vos, R., Martin, W., & Laborde, D. (2020). How much will global poverty increase because of COVID-19? Retrieved June 8, 2020, from IFPRI Website: https://www.ifpri.org/blog/how-much-will-global-poverty-increase-because-covid-19

World Bank. (2020). https://www.worldbank.org. Retrieved from https://www.worldbank.org/: https://www.worldbank.org/en/topic/poverty/brief/projected-poverty-impacts-of-COVID-19

World Bank. (2020). Poverty and Distributional Impacts of COVID-19: Potential Channels of Impact and Mitigating Policies. Washington DC: World Bank.

World Bank. (2020). World Bank. Retrieved September 25, 2020, from https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS