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Migration and capital accumulation: Evidence from rural Mexico

Author

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  • Vera Chiodi

    (J-PAL Europe - Abdul Latif Jameel Poverty Action Lab - Europe, 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)

  • Esteban Jaimovich

    (Collegio Carlo Alberto - UNITO - Università degli studi di Torino = University of Turin)

  • Gabriel Montes-Rojas

    (Department of Economics - UCL - University College of London [London])

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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  • Vera Chiodi & Esteban Jaimovich & Gabriel Montes-Rojas, 2009. "Migration and capital accumulation: Evidence from rural Mexico," Working Papers halshs-00575022, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00575022
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00575022
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    References listed on IDEAS

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    Cited by:

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    2. Yang, Jin & Wan, Qian & Bi, Wu, 2020. "Off-farm employment and grain production change: New evidence from China," China Economic Review, Elsevier, vol. 63(C).
    3. Amuedo-Dorantes, Catalina & Pozo, Susan, 2014. "When Do Remittances Facilitate Asset Accumulation? The Importance of Remittance Income Uncertainty," IZA Discussion Papers 7983, Institute of Labor Economics (IZA).
    4. Xinjie Shi, 2022. "Moving out but not for the better: Health consequences of interprovincial rural‐urban migration in China," Health Economics, John Wiley & Sons, Ltd., vol. 31(4), pages 555-573, April.
    5. Ainhoa Aparicio, 2011. "Network Effects on Migrants' Remittances," Carlo Alberto Notebooks 202, Collegio Carlo Alberto.
    6. Leonardo Bonilla-Mejía, 2017. "Choques externos y remesas internacionales en las regiones de Colombia," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 35(84), pages 189-202, December.
    7. Junaid Ahmed & Mazhar Mughal & Stephan Klasen, 2018. "Great Expectations? Remittances and Asset Accumulation in Pakistan," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(3), pages 507-532, April.
    8. Marcus H. Böhme, 2015. "Does migration raise agricultural investment? An empirical analysis for rural Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 46(2), pages 211-225, March.
    9. Ruixin Zhang & Lei Luo & Yuying Liu & Xinhong Fu, 2022. "Impact of Labor Migration on Chemical Fertilizer Application of Citrus Growers: Empirical Evidence from China," Sustainability, MDPI, vol. 14(13), pages 1-14, June.
    10. Katsushi S. Imai, 2017. "Roles of Agricultural Transformation in Achieving Sustainable Development Goals on Poverty, Hunger, Productivity, and Inequality," Discussion Paper Series DP2017-26, Research Institute for Economics & Business Administration, Kobe University.
    11. Göbel, Kristin, 2012. "Remittances and Gender-Speci fic Employment Patterns in Peru - a longitudinal Analysis," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 65409, Verein für Socialpolitik / German Economic Association.
    12. Xinhai Lu & Jiao Hou & Yifeng Tang & Ting Wang & Tianyi Li & Xupeng Zhang, 2022. "Evaluating the Impact of the Highway Infrastructure Construction and the Threshold Effect on Cultivated Land Use Efficiency: Evidence from Chinese Provincial Panel Data," Land, MDPI, vol. 11(7), pages 1-20, July.
    13. Piras, Simone & Vittuari, Matteo & Möllers, Judith & Herzfeld, Thomas, 2018. "Remittance inflow and smallholder farming practices: The case of Moldova," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 70, pages 654-665.
    14. Hua Lu & Hualin Xie & Qianru Chen & Jinfa Jiang, 2018. "Impact of Agricultural Labor Transfer and Structural Adjustment on Chemical Application: Comparison of Past Developments in the Ecological Civilization Pilot Zones of China and Their Future Implicatio," Sustainability, MDPI, vol. 10(6), pages 1-14, June.
    15. Xie, Fangting & Zhu, Shubin & Cao, Mengtian & Kang, Xiaolan & Du, Juan, 2019. "Does rural labor outward migration reduce household forest investment? The experience of Jiangxi, China," Forest Policy and Economics, Elsevier, vol. 101(C), pages 62-69.
    16. Gazi M. Hassan & Shafiqur Rahman, 2015. "Is the Democratisation Process Responsive to Remittance Flows? Evidence from Bangladesh," Working Papers in Economics 15/06, University of Waikato.
    17. Gazi M. Hassan & Mark J. Holmes, 2017. "How Do Workers' Remittances Respond to Lending Rates?," Working Papers in Economics 17/02, University of Waikato.
    18. Furqan Sikandar & Vasilii Erokhin & Hongshu Wang & Shafiqur Rehman & Anna Ivolga, 2021. "The Impact of Foreign Capital Inflows on Agriculture Development and Poverty Reduction: Panel Data Analysis for Developing Countries," Sustainability, MDPI, vol. 13(6), pages 1-22, March.
    19. Zhipeng Huang & Yan Zhang & Yi Huang & Gang Xu & Shengping Shang, 2022. "Sales Scale, Non-Pastoral Employment and Herders’ Technology Adoption: Evidence from Pastoral China," Land, MDPI, vol. 11(7), pages 1-13, July.

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    Keywords

    migration; remittances; capital accumulation; rural poverty;
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