International Migration and Self-Employment: Evidence from 4 Mexican Communities

Liliana Meza, Universidad Iberoamericana
Carla Pederzini, Universidad Iberoamericana

Using data from four Mexican urban communities, this study seeks to find out what kind of self-employment activities are more efficient retaining population in their communities, and whether these activities constitute a counterbalance to the migration networks. The central question is whether migration substitutes self-employment or complements it through remittances and human capital. To answer it, we use personal data, data on business activity, and data on migration experience. The estimated model shows that family networks play a fundamental role in migration determination, with lower importance when self employment variables are included. As the causality between migration and self-employment is not theoretically clear, the migration equation is estimated by two stage least squares and instrumental variables, to correct for the endogeneity problem. Our results suggest self-employment indeed deter migration, even in the presence of migration networks.