Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico

David Mckenzie; Hillel Rapoport

doi:10.1016/j.jdeveco.2006.11.003

Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico

David Mckenzie, Hillel Rapoport

Department of Economics

World Bank

Research output: Contribution to journal › Article › peer-review

437 Scopus citations

Abstract

International migration is costly and initially only the middle class of the wealth distribution may have both the means and incentives to migrate, which can increase inequality in the sending community. However, the migration networks formed lower the costs for future migrants, which can in turn lower inequality. This paper shows both theoretically and empirically that wealth has a nonlinear effect on migration, and then examines the empirical evidence for an inverse U-shaped relationship between emigration and inequality in rural sending communities in Mexico. After instrumenting, we find that the overall impact of migration is to reduce inequality across communities with relatively high levels of past migration. We also find some suggestive evidence for an inverse U-shaped relationship among communities with a wider range of migration experiences.

Original language	English
Pages (from-to)	1-24
Number of pages	24
Journal	Journal of Development Economics
Volume	84
Issue number	1
DOIs	https://doi.org/10.1016/j.jdeveco.2006.11.003
State	Published - Sep 2007

Bibliographical note

Funding Information:
Thanks to Nicole Hildebrandt, Cristobal Huneeus and Pascal Lévy-Garboua for excellent research assistance; suggestions and comments from Gordon Hanson, two referees, Frederic Docquier, Andrew Foster, Kaivan Munshi, Christopher Udry and seminar participants at Boston University, Brown, UC Berkeley, UC Davis, UC Santa Cruz, the World Bank DECRG and Yale; and Chris Woodruff for generously supplying his historic migration rate data. We are grateful for financial support for this project from the Rockefeller Foundation.

Funding

Thanks to Nicole Hildebrandt, Cristobal Huneeus and Pascal Lévy-Garboua for excellent research assistance; suggestions and comments from Gordon Hanson, two referees, Frederic Docquier, Andrew Foster, Kaivan Munshi, Christopher Udry and seminar participants at Boston University, Brown, UC Berkeley, UC Davis, UC Santa Cruz, the World Bank DECRG and Yale; and Chris Woodruff for generously supplying his historic migration rate data. We are grateful for financial support for this project from the Rockefeller Foundation.

Funders	Funder number
Rockefeller Foundation

Keywords

Inequality
Migration
Network effects
Remittances

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1016/j.jdeveco.2006.11.003

Cite this

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title = "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico",

abstract = "International migration is costly and initially only the middle class of the wealth distribution may have both the means and incentives to migrate, which can increase inequality in the sending community. However, the migration networks formed lower the costs for future migrants, which can in turn lower inequality. This paper shows both theoretically and empirically that wealth has a nonlinear effect on migration, and then examines the empirical evidence for an inverse U-shaped relationship between emigration and inequality in rural sending communities in Mexico. After instrumenting, we find that the overall impact of migration is to reduce inequality across communities with relatively high levels of past migration. We also find some suggestive evidence for an inverse U-shaped relationship among communities with a wider range of migration experiences.",

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AB - International migration is costly and initially only the middle class of the wealth distribution may have both the means and incentives to migrate, which can increase inequality in the sending community. However, the migration networks formed lower the costs for future migrants, which can in turn lower inequality. This paper shows both theoretically and empirically that wealth has a nonlinear effect on migration, and then examines the empirical evidence for an inverse U-shaped relationship between emigration and inequality in rural sending communities in Mexico. After instrumenting, we find that the overall impact of migration is to reduce inequality across communities with relatively high levels of past migration. We also find some suggestive evidence for an inverse U-shaped relationship among communities with a wider range of migration experiences.

KW - Inequality

KW - Migration

KW - Network effects

KW - Remittances

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Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico

Abstract

Bibliographical note

Funding

Keywords

UN SDGs

Access to Document

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