Remittance and its influence on food expenditure patterns in Nepal

Migration and remittances are central to Nepal's economy, yet their instrumental variable estimates of association with household food expenditure patterns remain underexplored. This study investigates the relationship between remittance inflows and food expenditure using nationally representative data from the Nepal Living Standards Survey (NLSS-IV, 2022–2023; N = 9600). Employing an instrumental variable (IV) approach – with district-level historical migration networks as the instrument – the IV estimates suggest that a 1% increase in remittance income is associated with a 0.069% increase in per capita food expenditure (p < 0.01). Descriptively, remittance-receiving households spend less on meat, dairy, and fruits compared to non-recipients, but this reflects compositional differences and endogeneity. Addressing endogeneity, the IV estimates indicate that remittances are associated with increased expenditure on nutrient-dense foods including vegetables, fruits, pulses, and dairy, while having no statistically significant association with staple cereals. Auxiliary analyses show remittances are associated with reduced household agricultural labor hours but show no statistically significant association with food price. Gender-stratified estimates reveal larger associations in female-headed households. These results suggest that remittances may enhance dietary diversity but do not automatically translate into agricultural engagement or price resilience. Potential policy interventions could consider linking remittance receipts to nutrition-sensitive agricultural investments and financial literacy programs, while strengthening social protection for non-recipient households.