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Migration, Remittances and Capital Accumulation: Evidence from Rural Mexico

  • Vera Chiodi
  • Esteban Jaimovich
  • Gabriel Montes-Rojas

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.

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File URL: http://www.carloalberto.org/assets/working-papers/no.140.pdf
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Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 140.

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Length: 45 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:cca:wpaper:140
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