Nepal made remarkable progress inpoverty reduction between 1995 and 2010, a period coincidingwith a decade-long violent conflict followed by tumultuouspost-conflict recovery. Although improving agriculturalproductivity was long regarded as instrumental to liftingthe living conditions of Nepal's impoverished ruralareas, a bulk of the observed poverty reduction has come asa result of exogenous improvements in economic opportunitiesfor poor Nepalis outside Nepal's borders. About 50percent of the poverty reduction witnessed between 1995 and2010 was associated with growth in labor incomes,particularly in nonagricultural activities. Privateremittance receipts account for a little over a quarter ofthe total poverty reduction seen in Nepal. This isconsistent with increased nonfarm diversification of ruralhouseholds as well as the increase in nonfarm wages over theperiod. Household demographic changes, brought about by asharp decline in fertility rates and the changing dependencystructure as a result of migration, have also played animportant role.