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Migration and Financial Constraints: Evidence from Mexico

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  • Angelucci, Manuela

    ()
    (University of Michigan)

Abstract

Using data collected for the evaluation of the rural component of Oportunidades, Mexico's flagship anti-poverty program, I show that poor households' entitlement to an exogenous, temporary but guaranteed income stream increases US migration even if this income is mainly consumed and that some households likely use the entitlement to this income stream as collateral to finance the migration. The individuals who start migrating because of this income shock belong to households with no counterfactual US migrants, come from the middle of the local predicted wage distribution, and worsen migrant skills. These results suggest that financial constraints to international migration are binding for poor Mexicans, some of whom would like to migrate but cannot afford to. If generalizable, they indicate that, as growth and anti-poverty and micro-finance programs relax financial constraints for the poor, Mexican migration to the US will increase and higher levels of border enforcement will likely be needed.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7726.

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Length: 50 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7726

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Keywords: financial constraints; migration; Mexico;

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References

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  1. Jere R. Behrman & Susan W. Parker & Petra E. Todd, 2009. "Schooling Impacts of Conditional Cash Transfers on Young Children: Evidence from Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 57(3), pages 439-477, 04.
  2. Robert Kaestner & Ofer Malamud, 2014. "Self-Selection and International Migration: New Evidence from Mexico," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 78-91, March.
  3. Manuela Angelucci, 2012. "US Border Enforcement and the Net Flow of Mexican Illegal Migration," Economic Development and Cultural Change, University of Chicago Press, vol. 60(2), pages 311 - 357.
  4. Vincenzo CAPONI, 2010. "Heterogeneous Human Capital and Migration: Who Migrates from Mexico to the us?," Annales d'Economie et de Statistique, ENSAE, issue 97-98, pages 207-234.
  5. Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September.
  6. Orrenius, Pia M. & Zavodny, Madeline, 2005. "Self-selection among undocumented immigrants from Mexico," Journal of Development Economics, Elsevier, vol. 78(1), pages 215-240, October.
  7. Gertler, Paul & Martinez, Sebastian & Rubio-Codina, Marta, 2006. "Investing cash transfers to raise long term living standards," Policy Research Working Paper Series 3994, The World Bank.
  8. Manuela Angelucci, 2012. "Conditional Cash Transfer Programs, Credit Constraints, and Migration," LABOUR, CEIS, vol. 26(1), pages 124-136, 03.
  9. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," NBER Working Papers 12141, National Bureau of Economic Research, Inc.
  10. Jesúús Fernández-Huertas Moraga, 2011. "New Evidence on Emigrant Selection," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 72-96, February.
  11. 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.
  12. David McKenzie & Hillel Rapoport, 2010. "Self-Selection Patterns in Mexico-U.S. Migration: The Role of Migration Networks," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 811-821, November.
  13. Woodruff, Christopher & Zenteno, Rene, 2007. "Migration networks and microenterprises in Mexico," Journal of Development Economics, Elsevier, vol. 82(2), pages 509-528, March.
  14. Dean Yang, 2006. "International Migration, Remittances, and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks," NBER Working Papers 12325, National Bureau of Economic Research, Inc.
  15. Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, vol. 86(4), pages 909-30, September.
  16. Valsecchi, Michele, 2010. "Land Certification and International Migration: Evidence from Mexico," Working Papers in Economics 440, University of Gothenburg, Department of Economics.
  17. Guy Stecklov & Paul Winters & Marco Stampini & Benjamin Davis, 2005. "Do conditional cash transfers influence migration? A study using experimental data from the Mexican progresa program," Demography, Springer, vol. 42(4), pages 769-790, November.
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