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Does migration reshape expenditures in rural households? Evidence from Mexico

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  • Taylor, J. Edward
  • Mora, Jorge
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    Abstract

    Migration reshapes rural economies in ways that may go beyond the contribution of migrant remittances to household income. Consumption and investment expenditures by migrant-sending households may transmit some of the impacts of migration to others inside and outside the rural economy, and they also may shape the potential effects of migration within the source household. Numerous studies have attempted to quantify the impact of migrant remittances on expenditures in migrant-sending households following one of two approaches. The first asks how migrant remittances are spent. It has the advantage of being simple but the significant disadvantage of ignoring the fungibility of income from migrant and nonmigrant sources. Remittances almost certainly have indirect effects on expenditures by way of their contribution to households'total budgets. The second uses a regression approach that considers remittances as an explanatory variable, in addition to total income and other controls, in a household expenditure demand system. It has the advantage of enabling one to test whether remittances affect expenditures in ways that are independent of their contribution to total income. But it does not take into account other ways, besides remittances, in which migration may influence expenditure patterns in households with migrants. It also may suffer from econometric bias resulting from the endogeneity of migration and remittance receipts. The same variables may simultaneously affect both remittances and household expenditures, and unless one controls for this, biased estimates may result.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3842.

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    Date of creation: 01 Feb 2006
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    Handle: RePEc:wbk:wbrwps:3842

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    Keywords: Investment and Investment Climate; Economic Theory&Research; Housing&Human Habitats; Remittances; Consumption;

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    Cited by:
    1. Dilip Ratha & Sonia Plaza, 2011. "Diaspora for Development in Africa," World Bank Publications, The World Bank, number 2295, October.
    2. Mere, Francisco, 2007. "Rural Migration in Mexico - An Overview," Agricultural Outlook Forum 2007 8082, United States Department of Agriculture, Agricultural Outlook Forum.
    3. Michael Lokshin & Mikhail Bontch-Osmolovski & Elena Glinskaya, 2010. "Work-Related Migration and Poverty Reduction in Nepal," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 323-332, 05.
    4. Garcia, Pablo M & Rodriguez-Montemayor, Eduardo, 2010. "A primer of international migration: The Latin American experience and a proposal for a research agenda," MPRA Paper 24147, University Library of Munich, Germany.
    5. Nguyen Viet Cuong & Daniel Mont, 2012. "Economic impacts of international migration and remittances on household welfare in Vietnam," International Journal of Development Issues, Emerald Group Publishing, vol. 11(2), pages 144-163, July.
    6. Lozano-Ascencio, Fernando & Huesca, Luis & Valdivia, Marcos, 2010. "Contribución de las remesas a los ingresos públicos en México
      [Contribution of remittances to public income in Mexico]
      ," MPRA Paper 27789, University Library of Munich, Germany, revised 01 Jan 2010.
    7. Carletto, Calogero & Covarrubias, Katia & Maluccio, John A., 2011. "Migration and child growth in rural Guatemala," Food Policy, Elsevier, vol. 36(1), pages 16-27, February.
    8. Eduardo Rodríguez-Montemayor & Pablo M. García, 2009. "A Primer of International Migration: The Latin American Experience," IDB Publications 9327, Inter-American Development Bank.
    9. Kristin Göbel, 2013. "Remittances, expenditure patterns, and gender: parametric and semiparametric evidence from Ecuador," IZA Journal of Migration, Springer, vol. 2(1), pages 1-19, December.

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