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Migration, Remittances and Capital Accumulation: Evidence from Rural Mexico

Author

Listed:
  • 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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    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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