internal migration and its impact on reducing inter-communal disparities in chile migration,...

Internal Migration and its Impact on ReducingInter-communal Disparities in Chile

Migration, Development, and Demographic Change – Problems, Consequences, Solutions”June 25 – 28, 2013, University of Antwerp, Belgium

Carlos Villalobos Barría (University of Goettingen)

Chair of Development Economics -- University of Goettingen

Arnoldshain S 2013 Antwerp, Belgien – Villalobos Barría – Internal Migration in Chile

Outline

• Motivation• Inter-communal migration in Chile• Who are the migrant workers?• Methodological difficulties

– Population of interest– Three steps estimation procedure

• Dependence on the family• Results• The story• Further discussion


Motivation

• Why Internal migration in Chile has become less relevant as equalization mechanism during the past decades? Soto and Torche (2004), Busso (2006), Cuervo González (2003) and Aroca (2004).

• What are the factors discouraging a functional labour mobility making it less able to reduce the earnings-gap across the territory?


Inter-Communal Migration

• From 2002 to 2006, migration from Rural towards Urban , (threshold set at 40,000 inhabitants) represented less than 4% of the population of origin (approximately 130.000 inhabitants)

• A similar flow is moving from Urban to Rural municipalities representing 1.1% of the population of origin

• About 21% of the population lives in Rural municipalities

• About 79% of the population lives in Urban municipalities

• Share of population: Stable over the last decade.Arnoldshain S 2013 Antwerp, Belgien – Villalobos Barría – Internal Migration in Chile

Who are the Migrant Workers?


Who are the Migrant Workers?

– Significant rural-urban earnings-gap! it supports the main hypothesis of this study

– Rural movers are younger, less experienced, more educated. They belong to relatively more educated families with a non-indigenous background


Methodological Difficulties • Threshold for rural/urban municipalities

– Similar approach by Coeymans (1983) and Raczynsky (1980)• Another threshold set at 20,000 inhabitants

• Self-Selection of Migrants

– The determinants of the employment self-selection are highly correlated to the determinants of the migration status

Strategy 1: Focus on migrant workersStrategy 2: Allow for unemployment and compare

– Migrant workers are not randomly selected at origin. (Rural or Urban municipalities)

Strategy: Three steps estimation procedureArnoldshain S 2013 Antwerp, Belgien – Villalobos Barría – Internal Migration in Chile

Population of Interest• Migrant is an individual who has moved to a different (rural to

urban / urban to rural) municipality within the last five years (recent migrant).

• Population: non-enrolled workers 25 years old and older reporting monthly labour earnings in 2006.

• Avoiding the endogeneity of schooling decisions and migration (+25)

• Avoiding the self-selection into the employment statusFocus on self-selection of migrant workers


Three Steps Estimation Procedure

• First Step: The estimation of a reduced form of the migration index function

• Second Step: To use the estimated parameters from the reduced form Probit model as starting values for the estimation of the Heckman corrected wage equations at origin and destination. A potential wage differential is now calculated (which is not more endogenous)

• The potential wage differential (in logs) and its square (allowing for nonlinearities) are then included in the third step to estimate structurally the index function for the migration probability


Dependence on the Family• Migration is family dependent• The degree to which the remaining members within the

household can generate income is important information for the potential migrant. Stark and Bloom (1985)

• An individual would be able to move, given other conditions, if he or she knows that in the case of migration, the household will not suffer a considerable reduction in welfare.

• correlated to the dependency ratio but conditional on the educational levels within the family

• Poor levels of household education would reflect high levels of dependency, which translate into a high opportunity cost in the form of higher reservation wages for the potential migrant (discouraging migration).


Results – First Step


Results – Second Step


Third Step – Structural Form


Wage Differential and Education


Wage Differential and HH Education


Earnings-Gap and the Migration Probability


The Story• Potential workers are positively selected in terms of education (years of

education). However, this variable is in some extent under the control of the individual.

• Potential workers are also positively selected in terms of the education of the other household members. (exogenous to the individual)

• On the one hand, high-wage differentials are associated with low levels of household education (good news; the poor could benefit from migration). On the other hand, low levels of household education discourage migration in a great extent.

• Market failure. The market signal is cancelled by adverse family background. • Migration flows are not effectively driven by income disparities. They are

constrained by household education (as proxy).• No territorial equalization is expected. The elimination of this household

dependency would contribute to close the earnings-gap across the territory


Further Discussion

• Migration as an investment decision requires to solve this market failure

• Programs encouraging labour mobility among the poor by providing Information on labour markets at possible destinations

• Financial support for the household after migration of the potential worker

• Migrant support at the destination


Thank you for your attention!


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