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Migration, Remittances and Capital Accumulation: Evidence from Rural Mexico

Author

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  • Vera Chiodi
  • Esteban Jaimovich
  • Gabriel Montes-Rojas

Abstract

This paper studies the link between migration, remittances and productive assets accumulation for a panel of poor rural households in Mexico over the period 1997-2006. In a context of financial markets imperfections, migration may act as a substitute for imperfect credit and insurance provision (through remittances from migrants) and, thus, exert a positive effect on investment. However, it may well be the case that remittances are channelled towards increasing consumption and leisure goods. Exploiting within family variation and an instrumental variable strategy, we show that migration indeed accelerates productive assets accumulation. Moreover, when we look at the effect of migration on consumption of non-productive assets (durable goods), we find instead a negative effect. Our results then suggest that poor rural families resort to migration as a way to mitigate constraints that prevent them from investing in productive assets.

Suggested Citation

  • Vera Chiodi & Esteban Jaimovich & Gabriel Montes-Rojas, 2010. "Migration, Remittances and Capital Accumulation: Evidence from Rural Mexico," Carlo Alberto Notebooks 140, Collegio Carlo Alberto.
  • Handle: RePEc:cca:wpaper:140
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    Citations

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    Cited by:

    1. Amuedo-Dorantes, Catalina & Pozo, Susan, 2014. "When Do Remittances Facilitate Asset Accumulation? The Importance of Remittance Income Uncertainty," IZA Discussion Papers 7983, Institute for the Study of Labor (IZA).
    2. Ainhoa Aparicio, 2011. "Network Effects on Migrants' Remittances," Carlo Alberto Notebooks 202, Collegio Carlo Alberto.
    3. Leonardo Bonilla Mejía, 2016. "Choques externos y remesas internacionales en las regiones de Colombia," Documentos de trabajo sobre Economía Regional y Urbana 250, Banco de la Republica de Colombia.
    4. Mazhar Yasin MUGHAL & Junaid AHMED, 2015. "Great Expectations? Remittances and Asset Accumulation in Pakistan," Working Papers 2014-2015_6, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Jan 2015.
    5. Raccanello, Kristiano, 2016. "Do Microenterprises’ size and status matter to access informal finance?./ ¿El tamaño y el registro de las microempresas permite el acceso a los mercados financieros informales?," Panorama Económico, Escuela Superior de Economía, Instituto Politécnico Nacional, vol. 12(23), pages 123-152, Segundo s.
    6. Marcus H. Böhme, 2015. "Does migration raise agricultural investment? An empirical analysis for rural Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 46(2), pages 211-225, March.
    7. Jean-Louis COMBES & Christian EBEKE & Mathilde MAUREL, 2011. "Remittances and the Prevalence of Working Poor," Working Papers 201109, CERDI.
    8. Göbel, Kristin, 2012. "Remittances and Gender-Speci fic Employment Patterns in Peru - a longitudinal Analysis," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 65409, Verein für Socialpolitik / German Economic Association.
    9. Katsushi S. Imai, 2017. "Roles of Agricultural Transformation in Achieving Sustainable Development Goals on Poverty, Hunger, Productivity, and Inequality," Discussion Paper Series DP2017-26, Research Institute for Economics & Business Administration, Kobe University.
    10. Catalina Amuedo-Dorantes & Susan Pozo, 2014. "Remittance income uncertainty and asset accumulation," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-24, December.
    11. Gazi M. Hassan & Shafiqur Rahman, 2015. "Is the Democratisation Process Responsive to Remittance Flows? Evidence from Bangladesh," Working Papers in Economics 15/06, University of Waikato.
    12. Gazi M. Hassan & Mark J. Holmes, 2017. "How Do Workers' Remittances Respond to Lending Rates?," Working Papers in Economics 17/02, University of Waikato.
    13. Gloria Clarissa O. Dzeha, 2016. "The decipher, theory or empirics: a review of remittance studies," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 5(2), pages 113-134.

    More about this item

    Keywords

    Migration; Remittances; Capital Accumulation; Rural Poverty;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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