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Migration and Development: Implications for Rural Areas Alan de Brauw International Food Policy Research Institute JRC-IFPRI Conference on Food and Nutrition Security Measurement Brussels, November 2017

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Page 1: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Migration and Development:

Implications for Rural Areas

Alan de Brauw International Food Policy Research Institute

JRC-IFPRI Conference on Food and Nutrition Security MeasurementBrussels, November 2017

Page 2: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Motivation: Voluntary Migration plays Central Role

in Development

• Countries with Higher GDP have lower share of labor in agriculture

– Migrants may go to either urban or rural areas

Page 3: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Illustration: GDP and Share of Labor in Agriculture

ALB

ARG

ARM

AUSAUT

AZE

BEL

BGR

BIH

BLR

BLZ

BMU

BOL

BRA

BRB

BRN

BTN

CAN

CEB

CHE

CHL

CHN

CIV

COLCRI

CUB

CYP

CZE

DEU

DNK

DOM

DZAEAP

EASECA

ECS

ECU

EGY

EMUESP

EST

ETH

EUU

FINFRAGBR

GEO

GMB

GRC

GTM

HIC

HND

HRVHUN

IBD

IDN

IRL

IRN

ISL

ISR ITA

JAM

JPN

KAZ

KGZ

KOR

LAC

LCA

LCN

LKA

LTE

LTU

LUX

LVA

MAC

MAR

MDA

MDG

MDV MEAMEX

MKD

MLT

MNA

MNE

MNG

MUSMYS

NAC

NAM

NLD

NOR

NZLOED

PAN

PER

PHL

POL

PRT

PRY

PSE

PST

QAT

ROURUS

RWA

SAU

SLV

SRB

SUR

SVKSVN

SWE

SYC

TEA

TEC

THA

TLA

TMN

TTO

TUN

TUR

TZAUGA

UKR

UMC

URY

USA

VEN

VNM

WSMXKX

ZAF

ZMB

ZWE

46

810

12

Lo

g, G

DP

pe

r ca

pita

0 20 40 60 80Share of Workforce in Agriculture

Source: World Development Indicators (2016)

Page 4: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Rural Population Share, 1996-2015

0

10

20

30

40

50

60

70

80

90

100

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ru

ral P

op

ula

tio

n S

har

e

Brazil

Mexico

ChinaIndonesiaNigeria

PakistanIndiaVietnam+Bangladesh

Ethiopia

Page 5: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Motivation: Voluntary Migration plays Central Role

in Development

• Countries with Higher GDP have lower share of labor in agriculture

– Migrants may go to either urban or rural areas

• International Migration more complicated (from rural perspective), but…

– Many small countries rely on remittances for a substantial share of GDP

– Migration quite important to some large economies (Bangladesh, Pakistan, Philippines, Mexico)

– International migrant origin often from rural areas

Page 6: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Remittances as a Share of GDP

Country Population Est.Rural Share of

PopulationRemittances

/GDP

Nepal 28.5 m 81.4 31.7

Liberia 4.5 m 50.3 31.2

Tajikistan 8.5 m 73.2 28.8

Kyrgyz Republic 5.9 m 64.3 25.7

Haiti 10.7 m 41.4 25.0

El Salvador 6.1 m 33.3 16.6

Senegal 15.1 m 56.3 11.9

Albania 2.9 m 42.6 9.2

Bangladesh 161 m 65.7 7.9

Morocco 34.3 m 39.8 6.9

Source: World Development Indicators (2016)

Page 7: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

ALB

BANCRCDOM

ECU

ELSHON

IDO

KYR

PHL

SEN

TJK

VNM20

40

60

80

Pe

rce

nt o

f In

tern

atio

na

l M

igra

nts

fro

m R

ura

l A

rea

s

20 30 40 50 60 70Percent of Population, Rural

International Migration from Rural Areas

Page 8: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Motivation: Voluntary Migration plays Central Role

in Development

• Countries with Higher GDP have lower share of labor in agriculture

– Migrants may go to either urban or rural areas

• International Migration more complicated (from rural perspective), but…

– Many small countries rely on remittances for a substantial share of GDP

– Migration quite important to some large economies (Bangladesh, Pakistan, Philippines, Mexico)

– International migrant origin often from rural areas

• But what are the effects of increasing migration on rural economies?

Page 9: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Outline of Talk

• The Rural-Urban Labor Productivity Gap – Is it due to migrant selectivity or due to costs or restrictions against

migration?

• How should migration affect rural economies?– Conceptual framework – how to think about potential effects of

migration on rural households

• Describe some evidence related to effects of migration on:– Agricultural Production;

– Investments;

– Risk Coping

• Conclusions related to policy

Page 10: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

A note on migration and food and nutrition security

• There is little talk in the migration literature about FNS, and

• There is little talk in the FNS literature about migration

• One reason is the length of the (potential) causal chain

• Does migrant’s food security improve?

• Does household’s food security improve?– Potential change in household income (so through ag in case of

rural emigration);

– Also a change in the denominator (number of people in household)

• Focus today on the income side

Page 11: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Individual Incentives to Migrate

• A large discussion ongoing in the literature about “wage gaps” and migration

– Harris-Todaro (1970) shows rural-urban migration should equilibrate agricultural “wage” with non-ag. wage*employment rate

• Some interest in issue of either rationale for wage gap or whether it is a statistical artifact

• Summary…

Page 12: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Evidence: Ag-Non Ag Productivity Gaps

• Gollin, Lagakos and Waugh (QJE; 2014) show large gap between ag and non-ag output, even accounting for hours worked and human capital– Agnostic about how gap occurs- whether through selectivity or through

migration restrictions

• Young (QJE; 2013) argues this gap can fully be explained by selectivity

• Similarly, Hicks et al. (2017) argue that selectivity can explain gap through individual level panel data

• On other hand, Bryan and Morten (2017) show that in Indonesia migration “costs” play important role in explaining the wage gap

Page 13: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Conceptual Framework: Household Perspective

• How can migration potentially affect agriculture or non-farm rural activities?

– If a migrant is sent out, they lose labor on the farm,

– But migrant may send back remittances (which can be invested on or off farm, or can add directly to consumption)

– Further, agricultural production is uncertain, so migration plays a role in diversifying that production risk

• Can write problem as:max𝐾,𝐿,𝐼

𝑉 = 𝑈1 𝑓 𝐾1, 𝐿1; ҧ𝐴 + 𝐸 𝑈2 𝑓 𝐾2 + 𝐸 𝐼 , 𝐿2; ҧ𝐴 + + 𝐸(𝑅 − 𝐼)

Page 14: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Theory: Implications

1. If choose to send out a migrant (or migrants), could be a lost labor effect on ag production

– But several adjustments that can be made to reduce impact of lost labor (change composition of family labor force, hired labor, capital)

2. Migration could lead to investments

– Could be productive (e.g. farm, non-farm investment)

– Could also be in durables (which really lead to a stream of consumption)

– Longer term– human capital investments

3. Could affect the way households deal with risk

Page 15: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Evidence: Agricultural Productivity

• Any evidence of lost labor effects in agriculture?

– In general, challenging problem due to endogeneity of migration so little convincing evidence in the literature

• But lots of papers from China…

• Outside China:

– De Brauw (2010) shows suggestive evidence of a shift from labor-intensive to land-intensive crops in northern Vietnam

– Quisumbing and McNiven (2010) find a null result in the Philippines in a small panel

Page 16: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

0

10

20

30

40

50

60

70

80

90

100

0

500

1000

1500

2000

2500

3000

1993 1997 2000 2004 2006 2009

Agricultural Labor, CHNS

Hours of Farmwork Share of Households Farming

• Meanwhile, plot level productivity in grains from China National Rural Survey, 2000 and 2008 (includes HH level fixed effects)

Evidence from China: Agriculture

Adapted from de Brauw et al. (2012)

All counties Poor counties only

Time Dummy (2008=1)

0.253***(0.058)

0.304***(0.076)

Number of Obs 4821 3298

Page 17: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Evidence: Investments (through Remittances)

• Back to the model: Investments in production can occur, but are inherently risky (agriculture)– Less risky are investments in consumer durables and housing

(especially if migrant is planning a return)

• Another investment more complicated- schooling– Could be a credit constraint to investment in schooling- higher

income -> more schooling

– Also an opportunity cost for higher levels of schooling (if work opportunity exists, so more migration -> less schooling)

• Statistical identification is a major issue in this literature

Page 18: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Mixed Evidence on Investments in Production

• Woodruff and Zenteno (2007) find long term migrant networks lead to higher investment in microenterprises in Mexico

• Yang (2008) uses exchange rate shocks to find impact on self-employment and entry into new types of entrepreneurship in Philippines

• On the other hand, – Gibson et al. (2011) show negative effects on agriculture, livestock in

short term from emigration to NZ from Tonga

– De Brauw and Giles (2018) find positive impacts on productive investment among relatively well off in China, but not among the poor (who migrate)

Page 19: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

• Potentially “safer” investment: housing

– Osili (2004) shows positive evidence in matched US Nigeria survey

– De Brauw and Giles (forth.) show stronger housing investment among poor migrant HHs in China

– Erval (2012)- qualitative research on Pakistani migrants in Norway

Evidence: Casas de remesas

Source: BBC Mundo

Page 20: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Positive Impacts

• Yang (2008) finds increase in educational expenditures, girls enrollment w exchange rate shock

• Theoharides (2017) also finds migration demand increases sec school enrollment by 3.5% (also Philippines)

• Dinkelman and Mariotti (2016) find higher schooling levels in Malawi where access to mines was easiest relative to poor access areas

Negative/Neutral Impacts

• McKenzie and Rapoport (2011) find reduction in enrollment among boys in Mexico

• De Brauw and Giles (2017) find reduction in HS enrollment in China

• Gibson, McKenzie and Stillman(2011) find non-result in Tonga among children left behind

Evidence: Investment in Schooling

Page 21: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Evidence: Investment in Young Child Nutrition

• Nutritional status among young children has been linked to positive outcomes (including wages) later in life (Hoddinott et al., 2008; Gertler et al., 2014)

• Could be improved outcomes from migrationthrough:

– increased income – more decision making power among women, but – Decreased time to care for children (negative)

• Mu and de Brauw (2015) show positive impacts on child weights in rural China• Carletto, Covarrubias, and Maluccio (2011) also find positive impacts on

height in Guatemala (US migration)• Gibson, McKenzie and Stillman (2011b) find opposite in Tonga

Picture: from New York Daily News

Page 22: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Evidence: Migration and Risk

• “Old” idea: Migration advantageous to rural households because covariance of incomes lower than for local off-farm labor (e.g. Rosenzweig and Stark, 1989)

• Poor potential migrants may not leave due to risk at destination (e.g. Bryan, Chowdhury and Mobarak, 2014)

• Yet can be a more complicated relationship

Page 23: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Evidence: Migration and Risk (cont.)

• Risk-sharing relationships provide imperfect insurance in many contexts (e.g. Udry, 1994)

• Morten (2017) studies how seasonal migration affects risk-sharing in source community in India– Idea- with more migration, due to covariate risk households might have

less need for insurance

– Finds evidence consistent with this idea- migration substitutes for local insurance mechanisms

• Policy implications suggest workfare (MNREGA) has a lower welfare gain in the presence of both informal insurance and temporary migration

Page 24: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Summary: Evidence on Rural Impacts of Migration

1. Rural-urban migration a feature of the development process

– Robust debate over how large the non-ag. “premium” is for labor

– Important: No evidence that migration has negative impacts on agricultural production

2. Impacts on investments are context specific

– Durables a secure investment, so positive impacts in several places

– Productive investments risky but some clear impacts on entrepreneurship

– Human capital investments are mixed

3. Migration has complex interactions with risk profiles of households and communities

Page 25: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Summary: Policy Implications

• Policies to hinder migration may also hinder increases in returns to labor on average– Even if migration largely according to Hicks et al. (2017), movement

of labor out of agriculture is at worst neutral for labor returns

– Policies should at worst embrace migration- realizing that there is a rationale for it even in a revealed preference sense

• Other policies may foster rural investment in either housing or productive investments– For example easing international remittances- lots of interest in this

idea (e.g. IFAD’s FFR)

Page 26: Migration and Development: Implications for Rural Areas · Migration and Development: Implications for Rural Areas Alan de Brauw ... EMU ESP EST ETH EUU GBRFRA FIN GEO GMB GRC GTM

Summary: Policy Implications (cont.)

• Policies seemingly unrelated to migration may have important interactions with migration– MNREGA or similar policies (e.g. PSNP in Ethiopia) may not have

same welfare enhancement in high (temporary) migration areas

– Policies that change expected returns or variance of returns to agriculture may also have interactions with migration• Land tenure reform and attempts to formalize insurance are key examples

– Basic income grant is “hot”, but how would it influence migration?

• Migration and nutrition- lots to do here (nutrition of migrant(s) especially)