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Migration, Risk, and Liquidity Constraints in El Salvador

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Author Info
Halliday, Timothy

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Abstract

This article utilizes panel data from El Salvador to investigate the use of transnational migration as an ex post risk management strategy. I show that adverse agricultural conditions in El Salvador increase both migration to the United States and remittances sent back to El Salvador. I show that, in the absence of any agricultural shocks, the probability that a household sent members to the United States would have decreased on average by 24.26%. I also show that the 2001 earthquakes reduced net migration to the United States. A one standard deviation increase in earthquake damage reduced the average probability of northward migration by 37.11%. The evidence suggests that the effects of the earthquakes had more to do with households retaining labor at home to cope with the effects of the disaster than with the earthquakes disrupting migration financing.

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Publisher Info
Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 54 (2006)
Issue (Month): 4 (July)
Pages: 893-925
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Handle: RePEc:ucp:ecdecc:y:2006:v:54:i:4:p:893-925

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rosenzweig, Mark R & Stark, Oded, 1989. "Consumption Smoothing, Migration, and Marriage: Evidence from Rural India," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 905-26, August. [Downloadable!] (restricted)
  2. John Fitzgerald & Peter Gottschalk & Robert Moffit, 1999. "Sample Attrition in Panel Data: The Role of Selection on Observables," Annales d'Economie et de Statistique, ADRES, issue 55-56, pages 06, Juillet-D. [Downloadable!]
  3. Hoddinott, John, 1994. "A Model of Migration and Remittances Applied to Western Kenya," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 459-76, July. [Downloadable!] (restricted)
  4. Udry, Christopher, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 495-526, July. [Downloadable!] (restricted)
  5. Stark, Oded & Levhari, David, 1982. "On Migration and Risk in LDCs," Economic Development and Cultural Change, University of Chicago Press, vol. 31(1), pages 191-96, October.
  6. Rosenzweig, Mark R, 1988. "Risk, Implicit Contracts and the Family in Rural Areas of Low-income Countries," Economic Journal, Royal Economic Society, vol. 98(393), pages 1148-70, December. [Downloadable!] (restricted)
  7. Udry, Christopher, 1995. "Risk and Saving in Northern Nigeria," American Economic Review, American Economic Association, vol. 85(5), pages 1287-1300, December. [Downloadable!] (restricted)
  8. Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 549-599, May. [Downloadable!] (restricted)
  9. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March. [Downloadable!] (restricted)
  10. Besley, Timothy, 1995. "Savings, credit and insurance," Handbook of Development Economics, in: Hollis Chenery† & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 36, pages 2123-2207 Elsevier. [Downloadable!] (restricted)
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  11. Martin Ravallion & Shubham Chaudhuri, 1997. "Risk and Insurance in Village India: Comment," Econometrica, Econometric Society, vol. 65(1), pages 171-184, January.
  12. Deaton, A. & Grosh, M., 1998. "Consumption," Papers 191, Princeton, Woodrow Wilson School - Development Studies.
  13. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-91, May. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Timothy J. Halliday, 2007. "Migration, Risk and the Intra-Household Allocation of Labor in El Salvador," Working Papers 200719, University of Hawaii at Manoa, Department of Economics. [Downloadable!]
    Other versions:
  2. Paul Raschky, 2007. "Estimating the effects of risk transfer mechanisms against floods in Europe and U.S.A.: A dynamic panel approach," Working Papers 2007-05, Faculty of Economics and Statistics, University of Innsbruck. [Downloadable!]
  3. Ilan Noy, 2007. "The Macroeconomic Consequences of Disasters," Working Papers 200707, University of Hawaii at Manoa, Department of Economics. [Downloadable!]
    Other versions:
  4. Acosta, Pablo, 2006. "Labor supply, school attendance, and remittances from international migration : the case of El Salvador," Policy Research Working Paper Series 3903, The World Bank. [Downloadable!]
  5. C. Calero & Arjun S. Bedi & R. Sparrow, 2008. "Remittances, liquidity constraints and human capital investments in Ecuador," Working Papers - General Series 458, Institute of Social Studies. [Downloadable!]
    Other versions:
  6. Pablo A. Acosta & Emmanuel K.K. Lartey & Federico S. Mandelman, 2007. "Remittances and the Dutch disease," Working Paper 2007-08, Federal Reserve Bank of Atlanta. [Downloadable!]
    Other versions:
  7. Stark, Oded, 2009. "Reasons for Remitting," Discussion Papers 52800, University of Bonn, Center for Development Research (ZEF). [Downloadable!]
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