Does Migration Reshape Expenditures in Rural Households? Evidence from Mexico

45 Pages Posted: 20 Apr 2016

See all articles by Jorge Mora

Jorge Mora

El Colegio de Mexico

J. Edward Taylor

University of California, Davis - Department of Agricultural and Resource Economics

Date Written: February 1, 2006

Abstract

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.

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

Suggested Citation

Mora, Jorge and Taylor, J. Edward, Does Migration Reshape Expenditures in Rural Households? Evidence from Mexico (February 1, 2006). World Bank Policy Research Working Paper No. 3842. Available at SSRN: https://ssrn.com/abstract=922968

Jorge Mora

El Colegio de Mexico

Mexico DF 01000

J. Edward Taylor (Contact Author)

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States
530-752-0213 (Phone)
530-752-5614 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
234
Abstract Views
1,521
rank
131,795
PlumX Metrics