The relationship between international migration, trade, and development: some paradoxes and findings

The interactions among trade, international migration, and economic development in migrant-sending areas are complex, and paradoxes abound. This paper summarizes global trends in world migration and remittances, discusses some paradoxes surrounding the trade-migration-development relationship, and reports findings from new research on Mexico-to-U.S. migration, using data from rural Mexico. It concludes with some thoughts about designing policies to raise the development potential of remittances in migrant-sending areas.Emigration and immigration ; International trade ; Economic development ; Developing countries ; Emigrant remittances ; Mexico

Does migration reshape expenditures in rural households? Evidence from Mexico

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.Investment and Investment Climate,Economic Theory&Research,Housing&Human Habitats,Remittances,Consumption

Farmers' Subjective Valuation of Subsistence Crops: The Case of Traditional Maize in Mexico

Shadow prices guide farmers' resource allocations, but for subsistence farmers growing traditional crops, shadow prices may bear little relationship with market prices. We econometrically estimate shadow prices of maize using data from a nationally representative survey of rural households in Mexico. Shadow prices are significantly higher than the market price for traditional but not improved maize varieties. They are particularly high in the indigenous areas of southern and southeastern Mexico, indicating large de facto incentives to maintain traditional maize there.Shadow prices, non-market values, supply response, traditional crops, onfarm conservation, Mexico, Agricultural and Food Policy, Community/Rural/Urban Development, International Development, O12, O13, Q12, Q39,

Relative deprivation and migration : theory, evidence, and policy implications

The authors examine the importance of absolute income and relative deprivation incentives for internal and international migration in developing country households. Empirical results, based on Mexican village data, support the hypothesis that households'relative deprivation in the village reference group is significant in explaining migration by household members to destinations where a reference group substitution is unlikely and the returns to migrations are high. Independent of relative deprivation, village households wisely pair their members with the labor markets in which the returns to their human capital are likely to be greatest. The results suggest that a specific type of migration constitutes a response to a specific configuration of variables, and the role of relative deprivation appears to differ for internal and international migration. Taking relative deprivation into account when studying migration is shown to have important implications for development policy. For example, economic development that does not redress intravillage income inequalities may become associated with more migration.Drylands&Desertification,Inequality,Anthropology,Banks&Banking Reform,Environmental Economics&Policies

AJAE Appendix: Farmers' Subjective Valuation of Subsistence Crops: The Case of Traditional Maize in Mexico

The material contained herein is supplementary to the article named in the title and published in the American Journal of Agricultural Economics.Crop Production/Industries,

Migration and Income Diversification Evidence from Burkina Faso

This paper uses limited-dependent variable methods and new data from Burkina Faso to test the impact of inter-continental and continental migration on activity choice and incomes in rural households. We provide theoretical reasoning and empirical evidence that the impact of emigration varies both by migrant destination and production activity. We find no evidence of either positive or negative effects of continental migration on agricultural or livestock activities and a small negative impact on non-farm activities. However, inter-continental migration, which tends to be long term and generates significantly larger remittances, stimulates livestock production while being negatively associated with staple and non-farm activities.Labor and Human Capital, D1, J2, Q12,

Impacts of the US Ethanol Boom in Rural Mexico

Assessing the human and environmental impacts of biofuels requires unraveling the connection between international trade, on one hand, and local land-use and social change, on the other, while accounting for cross-scalar linkages between and within social and environmental systems. We propose a disaggregated approach to model how macro shocks shape rural households’ decisions, and how these decisions integrate onto aggregate supply and land use patterns. The approach, built on an agent-based model of rural Mexico, is used to explore the impacts of ethanol-driven US corn price increases. Our estimate of a 5.7% expansion in corn area by 2008 and wide variation across regions corresponds fairly well with ex post reports. Estimates from alternative models exceed ours by up to 200%. Corn land expanded between 1.6% in the southeast and 16% in the northwest. A 3% increase in agricultural value added nevertheless did not promote rural development, whether measured in terms of total rural value added or income. Direct and indirect (multiplier) effects on rural incomes were limited. Rural households experienced a 0.02% increase in real income, while absentee (non-rural) landholders’ income increased 3.9%. Our approach highlights the crucial role of local market conditions and interactions among microeconomic actors in shaping biofuels’ impacts via local feedback mechanisms. It suggests that subsistence activities might keep deforestation pressures in check in some developing areas while precluding the rural population from benefiting. A disaggregated approach should help integrate future research on land-use change and economics.Crop Production/Industries,

Ecotourism and Economic Growth in the Galapagos: An Island Economy-wide Analysis

This paper raises questions about the compatibility of "ecotourism and conservation in the unique environment of the Galapagos Islands. It updates a 1999 economy-wide analysis that predicted that increases in tourism would result in rapid economic as well as demographic growth on the islands. The following six years witnessed sharp growth in tourism; a restructuring of tourism around larger cruise ships and new, larger hotels; and rapid population growth. Our findings indicate that total income (that is, the gross domestic product) of the Galapagos increased by an estimated 78% between 1999 and 2005, placing Galapagos among the fastest growing economies in the world. Tourism continues to be far and away the major driver of economic growth; however, new injections of all sorts of spending, including by government, commercial fishing, and conservation agencies, have had a multiplier effect on income in the Galapagos economy, and as a result, on population growth, via uncontrolled immigration that is theoretically prohibited by the Special Law of the Galapagos to prevent ecological harm to the islands. Further, immigration has diminished the effect of economic growth on household income, creating political pressure to find even more economic development options for Galapagos residents, including commercial fishing. The linkage between economic growth, led by tourism or any other sector, and environmental protection of the Galapagos should be taken seriously when designing and implementing economic development and conservation programs.Resource /Energy Economics and Policy,

THE IMPACT OF MIGRATION AND REMITTANCES ON RURAL INCOMES IN CHINA

New Economics of Labor Migration (NELM) theory posits a complex relationship between migrants and household income generation. This paper uses NELM and original survey data to examine the impacts of migration on income sources in Northeast China. Migration is found to increase farm incomes but decrease self-employed incomes.migration, remittances, China, self-employment, income sources, Consumer/Household Economics, Labor and Human Capital,

Impacts of Policy Reforms on Labor Migration From Rural Mexico to the United States

Using new survey data from Mexico, a dynamic econometric model is estimated to test the effect of policy changes on the flow of migrant labor from rural Mexico to the United States and test for differential effects of policy changes on male and female migration. We find that both IRCA and NAFTA reduced the share of rural Mexicans working in the United States. Increased U.S. border enforcement had the opposite effect. The impacts of these policy variables are small compared with those of macroeconomic variables. The influence of policy and macroeconomic variables is small compared with that of migration networks, as reflected in past migration by villagers to the United States. The effects of all of these variables on migration propensities differ, quantitatively and in some cases qualitatively, by gender.