Migration, Remittances and Capital Accumulation: Evidence from Rural Mexico

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.Migration; Remittances; Capital Accumulation; Rural Poverty

Migration and capital accumulation: Evidence from rural Mexico

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.migration ; remittances ; capital accumulation ; rural poverty

Human capital investment and long-term poverty reduction in rural Mexico

By focusing on human capital investment, the Mexican Oportunidades program will influence the economic choices of the rural poor. To understand how beneficiaries may alter their behavior as a result of this intervention, this paper uses administrative data to analyze the economic activities of the Mexican rural poor. Results indicate that investments in education are likely to shift recipients from agricultural wage employment toward non-farm wage employment. The magnitude of this impact will be influenced by household assets and by the location of the household. The results suggest the need for policies that complement the government's focus on human capital investment.En ciblant l'investissement en capital humain, le programme mexicain Oportunidades détermine le choix de spécialisation économique des foyers ruraux pauvres. L'objectif de ce papier est de connaître de quelle manière les bénéficiaires du programme changent leur comportement suite à cette intervention. Pour cela, ce papier utilise des données administratives pour analyser les activités économiques des foyers du Mexique rural. Les résultats indiquent que les investissements en éducation incitent les bénéficiaires à passer d'un emploi salarié agricole vers un emploi salarié non agricole. L'importance de cet impact est aussi déterminée par les actifs du foyer et par sa localisation géographique. Les résultats suggèrent la nécessité d'une politique gouvernementale qui complète l'investissement en capital humain

Migration and capital accumulation: Evidence from rural Mexico

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.Cet article analyse la relation entre migration et accumulation d'actifs sur des données de panel concernant des ménages ruraux au Mexique entre 1997 et 2006. Dans un contexte d'imperfection de marché, la migration peut constituer un substitut et avoir un effet positif sur l'investissement. Nous montrons que la migration encourage l'accumulation d'actifs productifs, au détriment d'actifs non-productifs. Nous illustrons nos résultats avec un modèle à deux périodes qui repose sur les décisions d'investissement et de migration pour des ménages en milieu rural avec des contraintes de crédit

Migration, Remittances and Capital Accumulation: Evidence from Rural Mexico

This article studies the link between migration, remittances and asset 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 instead. Exploiting within family variation and an instrumental variable strategy, we show that migration indeed accelerates productive assets' accumulation. However, when we look at the effect of migration on non-productive assets (durable goods), we find 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

Migration and capital accumulation: Evidence from rural Mexico

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