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Migration, Remittances and Capital Accumulation: Evidence from Rural Mexico

Chiodi, V., Jaimovich, E. and Montes-Rojas, G. (2012). Migration, Remittances and Capital Accumulation: Evidence from Rural Mexico. Journal of Development Studies, 48(8), pp. 1139-1155. doi: 10.1080/00220388.2012.688817

Abstract

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.

Publication Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in Journal of Development Studies on 29 Aug 2012, available online: http://wwww.tandfonline.com/10.1080/00220388.2012.688817
Publisher Keywords: Migration; Remittances; Capital Accumulation; Rural Poverty
Subjects: H Social Sciences > HB Economic Theory
Departments: School of Arts & Social Sciences > Economics
URI: http://openaccess.city.ac.uk/id/eprint/12021
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