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.

Bibliographic Details

Main Authors:	Taylor, J. Edward, Mora, Jorge
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	World Bank, Washington, DC 2006-02
Subjects:	ALLOCATION MODELS, BUDGET CONSTRAINTS, CAPITA INCOME, COMMODITIES, COMMUNITIES, CONSUMER, CONSUMER DEMAND, CONSUMER GOODS, CONSUMPTION EXPENDITURES, DURABLE GOODS, ECONOMETRIC ANALYSIS, ECONOMIC GROWTH, EFFECT OF REMITTANCES, EFFECTS OF REMITTANCES, EQUATIONS, EXCHANGE RATE, EXPENDITURES, HOUSEHOLD BUDGETS, HOUSEHOLD CONSUMPTION, HOUSEHOLD EXPENDITURE, HOUSEHOLD EXPENDITURES, HOUSEHOLDS, HOUSING, HUMAN CAPITAL, IMPACT OF MIGRATION, INCOME, INCOMES, INCREASE IN REMITTANCES, INHABITANTS, INTERNATIONAL MIGRANTS, INTERNATIONAL MIGRATION, INVESTMENT CHOICES, INVESTMENT EXPENDITURES, LABOR MARKETS, LESS DEVELOPED COUNTRIES, MARGINAL PROPENSITY TO CONSUME, MARKET PRICES, MIGRANT REMITTANCES, MIGRANTS, OPPORTUNITY COST, REMITTANCE, REMITTANCE RECEIPTS, REMITTANCE TRANSFER, REMITTANCE USE, REMITTANCE-RECEIVING HOUSEHOLDS, REMITTANCES, RISK AVERSION, RURAL AREAS, RURAL COMMUNITIES, RURAL ECONOMY, SALES, SHADOW PRICES, SUPERMARKETS, URBAN COMMUNITIES, USE OF REMITTANCES, VILLAGES, WAGE WORK, WEALTH,
Online Access:	http://documents.worldbank.org/curated/en/2006/02/6567904/migration-reshape-expenditures-rural-households-evidence-mexico http://hdl.handle.net/10986/8785
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