Abstract
This thesis examines the relationship between remittances and effects on household labor supply by the left behind in Nepal by using cross- sectional analysis of the data from a household survey conducted in 2016 by the researcher. It provides a comprehensive overview of the effects of remittances on the labor supply by the left behind household members. The study finds that the households, which receive remittances, and those, which do not receive remittances, are different in terms of their income sources. If the income from remittance is excluded, the sources of income are not systematically different for both remittances receiving and non- remittance receiving households. Remittance income is the major source of income for those households who receive remittances. For the household expenditure, receiving remittance does not make a difference in the expenditure patterns of the households in the survey area. The labor supply is divided into wage earning and non- wage-earning activities. The study, using simple regression with binary explanatory variable, concludes that as a household member migrates, the remaining household members reallocate their labor supply. The household members supply less labor in the wage earning activities; the household head’s supply of work on non- wage earning increases whereas the other members non- paid work decreases. The report supports the traditional economic theory as the receipt of remittance income increases the leisure of the remaining household members and the labor supply curve is upward sloping. The labor supply response is examined in both extensive and intensive margins. In the extensive margin, the database is not suitable because of presence of nonmonetized labor market where labor exchange is a common practice. In the intensive margin, the receipt of remittance alone cannot explain the difference in the labor supply responses between the remittance receiving and nonremittance receiving households.