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Mexican Microenterprise Investment and Employment: The Role of Remittances

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  • Christopher Woodruff

Abstract

Using data from Mexican surveys of Microenterprises conducted between 1992 and 1998, we examine the association between migration to the US and investment in microenterprises, the use of paid and unpaid labor, and the earnings of micro entrepreneurs. We find that investments in microenterprises are positively associated with migration rates and that in enterprises owned by females, migration is also associated with greater use of unpaid labor. For males, the connection between migration and the log of invested capital grew much stronger during the 1990s. Given the rapid increase in out-migration and remittance flows during the 1990s, this is consistent with expectations. These results apply to the migration rate of the microenterprise owner's state of birth, regardless of his/her current state of residence, and hold when current migration rates are instrumented for using historical migration rates. Kernel densities show that entrepreneurs born in high migration regions in Mexico have higher earnings.

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Bibliographic Info

Paper provided by Inter-American Development Bank in its series IDB Publications with number 9350.

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Date of creation: Feb 2007
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Handle: RePEc:idb:brikps:9350

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Keywords: Remittances; Migration & Migrants; INTAL ITD Working Paper N° 26; INTAL; Remesas; Migraciones;

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Cited by:
  1. Carlo Alcaraz & Daniel Chiquiar & Alejandrina Salcedo, 2010. "Remittances, Schooling, and Child Labor in Mexico," Working Papers, Banco de México 2010-14, Banco de México.
  2. Aggarwal, Reena & Demirgüç-Kunt, Asli & Pería, Maria Soledad Martínez, 2011. "Do remittances promote financial development?," Journal of Development Economics, Elsevier, Elsevier, vol. 96(2), pages 255-264, November.
  3. Nyamongo, Esman Morekwa & Misati, Roseline N. & Kipyegon, Leonard & Ndirangu, Lydia, 2012. "Remittances, financial development and economic growth in Africa," Journal of Economics and Business, Elsevier, Elsevier, vol. 64(3), pages 240-260.
  4. Anzoategui, Diego & Demirgüç-Kunt, Asli & Martínez Pería, María Soledad, 2014. "Remittances and Financial Inclusion: Evidence from El Salvador," World Development, Elsevier, Elsevier, vol. 54(C), pages 338-349.
  5. Demirgüç-Kunt, Asli & Córdova, Ernesto López & Pería, María Soledad Martínez & Woodruff, Christopher, 2011. "Remittances and banking sector breadth and depth: Evidence from Mexico," Journal of Development Economics, Elsevier, Elsevier, vol. 95(2), pages 229-241, July.
  6. Mim, Sami Ben & Ali, Mohamed Sami Ben, 2012. "Through which channels can remittances spur economic growth in MENA countries?," Economics Discussion Papers, Kiel Institute for the World Economy 2012-8, Kiel Institute for the World Economy.
  7. Mim, Sami Ben & Ali, Mohamed Sami Ben, 2012. "Through which channels can remittances spur economic growth in MENA countries?," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, Kiel Institute for the World Economy, vol. 6(33), pages 1-27.

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