Cazzuffi, Chiara (2017). 'Place of origin and the earnings of internal migrants in Mexico' Paper presented at the annual conference of the HDCA, Cape Town 2017.
Spatial inequality, that is, disparities among places in economic activities, incomes, and social indicators, is an important component of overall inequality. Mexico displays high levels of spatial inequality among states and regions in both income and human development. Spatial inequality has very tangible effects on people’s welfare and opportunities, including through availability and quality of employment, education, and healthcare, which, in turn, affect the capability of a person to live the life she values and to realize her dreams and ambitions.
Is spatial inequality something that policy makers should be concerned about? A key argument against territorial development policies relies on migration as an instrument for individuals to improve their fortunes, and as an adjustment mechanism to achieve the economic integration of lagging regions and shared prosperity from spatially uneven economic growth. This paper recognizes the importance of migration for development and is motivated by a different concern: if spatial inequality leads to inequality of opportunities, migration alone might not succeed to completely reverse the detrimental impacts of growing up in a disadvantaged place.
The paper examines the relationship between adult earnings of internal migrants in Mexico and the level of development of the place where they grew up, to understand whether being born and growing up in a disadvantaged place has any influence on the earnings of adult emigrants. Controlling for self-selection into migration and labour market participation, results suggest that growing up in a disadvantaged place is associated with significantly lower earnings among adults, and that emigrating does not weaken this relationship: migrants who grew up in a poorer place earn significantly less than migrants with similar characteristics but who grew up in a richer place. Results also suggest that growing up in a richer place is associated with higher adult earnings primarily because it increases the human capital of the migrant and of her network, and because it leads to more positive attitudes and beliefs about the future.
Migrants from disadvantaged places, and their family, may still be better off than if they had stayed, and remittances will still help the development of the place of origin, but spatial inequalities lead to a persistent penalty that lasts even after two decades living in a different place. Internal migration might thus reproduce the existing pattern of spatial inequality, dampening the process of regional convergence instead of acting as an adjustment mechanism towards it.
Migration and territorial development policies have often been portrayed as opposing alternatives, but they might be not just complementary, but mutually reinforcing. Territorial development policies, for instance by improving coverage and quality of public goods and services, such as water and education, and promoting employment creation through entrepreneurship and small business creation, could improve the welfare of people who stay, and also of those who still chose to migrate. Territorial development policies aimed at improving the prospects of lagging regions and reducing spatial inequality might in fact be necessary for reaping the full potential benefits of migration.