Kiel Working Papers, Kiel Institute for World Economics
No 1622:
Village level inequality, migration and remittances in rural Mexico: How do they change over time?
Aslihan Arslan and J. Edward Taylor
Abstract: We analyze how migration prevalence and remittances shape
income distribution using novel panel data that is nationally and
regionally representative of rural Mexico. Employing a Gini decomposition
and controlling for whole household migration (attrition), we find that
migration prevalence has increased between 2002 and 2007 reversing the
unequalizing effects of international remittances at the national level. We
also analyze regional differences in the effects of remittances on
inequality, and find that the regions that had the highest increase in
international migration are also the regions where the equalizing change in
the marginal effects of remittances was the highest. This provides
supporting evidence for the migration diffusion hypothesis. A fixed effects
analysis of the effects of migration and remittances on in inequality at
the village level, however, fails to support this hypothesis, indicating
that most changes in inequality have occurred within rather than between
villages. We show that income growth has been pro-poor in all villages, but
this is offset by significant re-ranking of individuals in the village
inequality measure, concealing the effects of migration and remittances on
income distribution at the village level
Keywords: Inequality, Migration, Network effects, Panel Data, Remittances, Mexico; (follow links to similar papers)
JEL-Codes: O15; (follow links to similar papers)
28 pages, May 2010
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