Migration and Financial Constraints: Evidence from Mexico
AbstractUsing 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 InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7726.
Length: 50 pages
Date of creation: Nov 2013
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Find related papers by JEL classification:
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-22 (All new papers)
- NEP-MFD-2013-11-22 (Microfinance)
- NEP-MIG-2013-11-22 (Economics of Human Migration)
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