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Does migration raise agricultural investment? An empirical analysis for rural Mexico
Author(s) -
Böhme Marcus H.
Publication year - 2015
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/agec.12152
Subject(s) - endogeneity , investment (military) , economics , instrumental variable , agriculture , livestock , subsistence agriculture , panel data , capital (architecture) , animal husbandry , estimation , agricultural economics , production (economics) , geography , macroeconomics , econometrics , forestry , law , management , archaeology , politics , political science
The effect of remittances on capital accumulation remains a contested topic. This article uses a panel data set from rural Mexico to investigate the impact of remittances on agriculture and livestock investments. After controlling for the endogeneity of migration through an instrumental variable estimation our empirical results show that international migration has a significantly positive effect on the accumulated agricultural assets but not on livestock capital. This suggests that households use the capital obtained from international migration only to overcome liquidity constraints for subsistence production whereas migration itself seems to be the superior investment option compared to other productive activities such as livestock husbandry.