J. Edward Taylor

Remittances and Inequality

In this paper the authors propose a framework and develop techniques for analyzing the impact of migrant remittances on the distribution of rural income by size and subsequently its impact on rural welfare. Household data are used to assign numerical coefficients to the impact of net remittances from both internal and international migrants on income inequality in 2 Mexican villages. The impact of migrant remittances on the distribution of rural income by size depends critically on the degree to which migration opportunities become diffused through the village population on the returns to human capital embodied in remittances and on the distribution of potentially remittance-enhancing skills and education across village households. Our empirical findings demonstrate that in a village where many households contain internal migrants but few have experience migrating to the U.S. remittances from Mexico-to-US migrants have an unequalizing impact on village incomes while remittances from internal migrants have a favorable effect on the village income distribution. By contrast in a village with a long historyh of sending migrants to the US and hence a more ready access to US labor markets US-to-Mexico remittances have an equalizing impact on incomes. Remittances from internal migrants in this village however embody a large human capital component and are highly correlated with household income. Hence internal migrant remittances account for a comparatively large share of inequalities in the 2nd village. The overall effect of remittances on income inequality is favorable in both villages. Migration type migration stage and interaction terms all appear to play a role in this context. The effects of small changes in remittances upon income inequality and rural welfare in the 2 villages are explored and some implications for migration and rural development policy are considered. (authors modified)

Migration and Incomes in Source Communities: A New Economics of Migration Perspective from China*

The objective of this paper is to understand the effects of China’s migration on source communities and to discuss their policy implications. We draw from New Economics of Labor Migration (NELM) theory to understand how migration and migrant remittances can relax or tighten market constraints in China’s rural economy. Using simultaneous-equation econometric techniques and household survey data from China, we estimate net, sectorspecific effects of migration on rural household income, focusing on farm production and self-employment. Our econometric findings indicate that the loss of labor to migration has a negative effect on household cropping income in source areas. However, we provide evidence that remittances sent home by migrants positively compensate for this lost-labor effect, contributing to household incomes directly and indirectly by stimulating crop and possibly self-employment production. This finding offers evidence in support of the NELM hypothesis that remittances loosen constraints on production in the imperfect-market environments characterizing rural areas in less developed countries. Taking into account both the multiple effects of migration and the change in household size, participating in migration increases household per-capita income between 14 and 30 percent. Migration and Incomes in Source Communities: A New Economics of Migration Perspective from China China is experiencing the largest peacetime flow of labor out of agriculture ever witnessed in world history (Solinger, 1999; Rozelle et al., 1999). Despite the rapid expansion of labor migration, China’s work force is still disproportionately employed in agriculture compared to other countries at similar levels of per-capita GDP (Taylor and Martin, 2001). Hence, as China’s economy continues to expand, the flow of labor to urban areas will continue and even accelerate (Johnson, 1999). The massive flow of labor away from farms has intensified research interest in China’s migration in recent years. However, as in the broader literature on migration in less developed countries, most recent studies on China’s migration have focused on determining the size and composition of the labor flow, macroeconomic implications of increased migration, and the effects of migration on urban areas (Zhao, 1999; Yang, 1999; 1997). Less emphasis has been placed on researching the effects of migration on the rural communities that migrants leave, even though evidence shows that the rural household in the village of origin is typically the central concern of all those involved in migration– both those who leave and those who stay behind (exceptions include Wang and Zuo, 1999; Bai, 2001). Moreover, the recent increase in migration has left policy makers particularly concerned regarding the way source communities will be affected (MOA, 1999). They are concerned that as labor flows away from farms, food production and crop income will decline, potentially threatening China’s food security. Furthermore, policy makers are concerned about the increasing gap between urban and rural household incomes. If migration exacerbates this gap, some fear that as it grows rural residents eventually will flood cities ill-equipped to absorb them. Others fear that discontent over a rising urban-rural income gap could even spill over into political unrest (Yang, 1999). Because China’s markets and other modern economic institutions are still relatively undeveloped, migration may play a pivotal role in creating or overcoming constraints caused by the lack of well-functioning markets and/or institutions (Knight and Song, 1999; Benjamin and Brandt, 2000). The “new economics of labor migration” (NELM) literature analyzes migration as a household decision rather than as an individual decision (Stark, 1991). The NELM hypothesizes that rural households facing imperfect market environments decide

The shadow value of migrant remittances, income and inequality in a household‐farm economy

This article offers econometric evidence that income remittances sent home by family migrants stimulate household‐farm incomes indirectly by relieving credit and risk constraints on household‐farm production. A high but unequally distributed shadow value of migrant remittances appears to reinforce an equalising direct effect of remittances on the income distribution across a sample of household‐farms in rural Mexico.

Remittances and inequality reconsidered: Direct, indirect, and intertemporal effects

This article proposes and tests a method for estimating direct, indirect, and intertemporal effects of migrant remittances on the size distribution of income as measured by a Gini coefficient. Empirical findings based on new matched longitudinal data from Mexico support the hypothesis that migrant remittances have indirect short-term effects and long-term asset accumulation effects on the level and distribution of household-farm income. They point to the importance of considering new influences on income inequality if policymakers are not indifferent to the distributional impact of development programs and policies.

Undocumented Mexico—U.S. Migration and the Returns to Households in Rural Mexico

This paper presents estimates of net income gains to a sample of households in rural Mexico from sending migrants illegally to the United States, correcting for sample selectivity bias, and it examines the role of expected income gains in driving illegal Mexico—U.S. migration. There is no evidence that people who migrate illegally to the United States are above-average contributors to household income, either as workers in Mexico or as Mexico—U.S. migrants. However, other things being equal, villagers who are in the best position to contribute to household income as workers in Mexico are positively selected not to migrate to the United States.

Agroclimatic shock, income inequality, and poverty: Evidence from Burkina Faso

Abstract This paper examines the impacts of agroclimatic shock on income inequality and poverty, using household-farm data from three agroecological zones of Burkina Faso together with income-source decompositions of the Gini coefficient and the Foster-Greer-Thorbecke poverty index before and after a severe drought. Our findings reveal that, because the poor lack acces to off-farm income, off-farm income increases inequality and fails to shield poor households against agroclimatic risks. The direction of the empirical relationship between changes in inequality and poverty after the drought depends critically on environmental variables and on apparent constraints on income diversification at different points in the income distribution.

Technology adoption and biological diversity in Andean potato agriculture

Abstract Biological diversity in cradle areas of crop origins has been an important source of genetic resources for world agriculture. The loss of biological resources in agricultural systems due to the introduction of high-yielding varieties is a potential cost of agricultural development. Our econometric analysis using data from Peru indicates that the adoption of high-yielding potato varieties results in a reduction but not a complete loss of biological diversity on individual farms and a possible loss in aggregate diversity. We conclude that on-site conservation of seed resources may be a viable complement to the off-site methods now in place.

Migration, remittances and inequality: A sensitivity analysis using the extended Gini index☆

Abstract This paper uses the extended Gini inequality index to examine the sensitivity of measurements of impacts of migrant remittances on the distribution of household income by size to different value judgements when measuring inequality. The results illustrate the robustness of earlier findings that the impacts of migration on village income distributions differ for different types of migration and for different periods in a villages migration history. The magnitude of these impacts, however, appears to be quite sensitive to the weights attached to incomes at different points in the village income distribution. For example, in a village with considerable Mexico-to-U.S. migration experience, remittances from Mexico-to-U.S. migrants have a favorable effect on the village income distribution. However, the extended Gini analysis shows that this favorable impact decreases as more weight is attached to incomes in the poorest households. This finding is consistent with the view that barriers to high-paying Mexico-to-U.S. migration work exist for households at the bottom of the village income distribution.

Is structural adjustment with a human face possible? The case of Mexico

The article attempts to model structural adjustment patterns in a single, middle‐income oil exporter, Mexico. It explores the economy‐wide costs, in terms of economic growth, income inequality and poverty, of Mexicos economic stabilisation policies of the 1980s. On the basis of counterf actual simulation, it also explores the likely impacts of alternative adjustment strategies. This analysis utilises a modified Social Accounting Matrix (SAM) approach designed to overcome one of the major shortcomings of the conventional SAM: the assumption of unitary expenditure elasticities in household accounts. The base model is calibrated to track the overall and sectoral growth performance of the Mexican economy from 1980 to 1986 and becomes the foundation upon which our policy experiments are built. The article is part of an on‐going study of economy‐wide impacts of alternative structural adjustment policies in Mexico [Adelman and Taylor, 1990], and proceeds as follows: the SAM framework and estimated SAM are descr...

Life in a Mexican village: A SAM perspective

This article employs a Social Accounting Matrix (SAM) to analyse the economic structure of a migrant‐sending rural economy. A village SAM is constructed using 1982 household data from a major migrant‐sending village in Central Mexico. The village matrix multiplier and its decompositions are derived from the SAM and are utilised in policy experiments on the production, value added, income, and investment flows of the village. The results highlight the central role of both internal and international migration in the village economy, as well as the importance of targeting directly anti‐poverty policies toward the landless.