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Migration and capital accumulation: Evidence from rural Mexico

Author

Listed:
  • Vera Chiodi
  • Vera Chiodi

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This paper studies the link between migration, remittances and productive assets accumulation for a panel of poor rural households in Mexico over the period 1997- 2006. In a context of financial markets imperfections, migration may act as a substitute for imperfect credit and insurance provision (through remittances from migrants) and, thus, exert a positive effect on investment. However, it may well be the case that remittances are channelled towards increasing consumption and leisure goods. Exploiting within family variation and an instrumental variable strategy, we show that migration indeed accelerates productive assets accumulation. Moreover, when we look at the effect of migration on consumption of non-productive assets (durable goods), we find instead a negative effect. Our results then suggest that poor rural families resort to migration as a way to mitigate constraints that prevent them from investing in productive assets.
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Suggested Citation

  • Vera Chiodi & Vera Chiodi, 2012. "Migration and capital accumulation: Evidence from rural Mexico," Post-Print halshs-01063694, HAL.
    • Handle: RePEc:hal:journl:halshs-01063694
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    1. Giuliano, Paola & Ruiz-Arranz, Marta, 2009. "Remittances, financial development, and growth," Journal of Development Economics, Elsevier, vol. 90(1), pages 144-152, September.
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    5. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-918, October.
    6. Hillel Rapoport, 2002. "Migration, credit constraints and self-employment: A simple model of occupational choice, inequality and growth," Economics Bulletin, AccessEcon, vol. 15(7), pages 1-5.
    7. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
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    Cited by:

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