International migration and remittances: assessing the impact on rural households in El Salvador.

Abstract

This dissertation project examines the impact of human migration and remittances on rural household behavior in El Salvador. It specifically focuses on two questions: (1) How is household labor supply allocation affected by migration and remittances? (2) How do remittances affect agricultural production outcomes at the household level? An agricultural household model that integrates migration and remittances predicts that when households are credit constrained they allocate their family labor back to their own farm when remittances are received. Further, the agricultural model suggests that when remittances are received households will invest in the production of riskier cash crops. The data used for the empirical analysis for this project cover six years and were collected in El Salvador in 1996, 1998, 2000, and 2002. The empirical analysis uses panel data to examine how changes in both the migration status of the household and remittance levels affect different family members' labor allocations. Factors that determine both migration decisions and remittance levels are also estimated. Unlike previous studies, this study finds that it is migration not remittances that affects a family's labor allocation decisions. When a household engages in migration, this increases the hours of on-farm work for all household members (adult males, females, and children) and decreases the hours of off-farm work for adult males. Remittances have no significant affect on household labor allocations. Further, a cross-sectional analysis indicates that migrant females in the United States send more remittances than male migrants. Findings regarding household agricultural outcomes suggest that migration decreases a household's coefficient of variation for agricultural revenue. Further, migrant households dedicate a larger share of their land to their house lot and basic grains production than non-migrant households. Migrant households also decrease the amount of land dedicated to cash crops other than coffee. Migrant households are more active in land rental markets, both renting more land in and renting more land out than non-migrant households. Remittances seem to have relatively little impact on agricultural production activities as compared to migration itself.