Abstract: Over the past three decades, the drop in fertility rates has been accompanied by high rates of migration in several developing countries. We argue that migration affects fertility negatively in the countries of origin. To analyze the effect of migration we build a fertility choice model, based on De La Croix (2014), with endogenous migration decisions. In this framework, when a member of the household migrates abroad, income increases due to remittances but at the same time, individuals left at home face a much higher opportunity cost time. This means that household members have less time to devote to taking care of the children and the consequence is a decrease in fertility. We calibrate the model to match the migration rates and to quantify the effect of migration on the fertility rate in those countries. To this end, we first show that the model can replicate the high rate of migrations in several developing countries. Then we perform two counterfactual exercises to address the effect of our mechanism. In the first exercise, we keep the migration constant as in the benchmark model while we give a higher value to the time cost of migration. The result is an increase in fertility. In the second exercise, we quantify how the differences in the time cost of migration affect the differences in fertility. We found that the time cost of migration accounts for 53% of the fall in the fertility of the developing countries in our sample between 1990 and 2017.
Abstract:The paper analyzes the effect of remittances on structural change. We use a two-sector growth model to quantify the effect of remittances on the service sector, using a sample of 73 developing countries during the period 1995-2019. We obtain three main findings. First, we show that remittances can explain 9.7% of the average size of the service sector in our sample of countries. Second, we also show that the effect of remittances on sectoral composition is significative to explain differences between poor and middle-income countries, whereas it is a minor to explain differences in sectoral composition among more developed countries. Finally, we show that remittances contribute to explain a significant part of the total variation in the share of employment in services in the period 1995-2019 in some developing countries.
-"Consumption and the Size of Informal Employment" with Edgar Cruz Abstract: We document two structural transformations of the Mexican economy from 1995 to 2018: (i) changes in the size of informal employment, and (ii) changes in the pattern of consumption through informal markets, namely informal consumption. We argue that these two economic transformations are linked. To explain these two facts, we argue that consumers differentiate goods and services by the embodied quality of these products, and we assume that only formal firms provide quality products in the economy. Under these assumptions, increasing consumers’ demand for quality goods and services induces the reallocation of employment from informal to formal firms as the quality increases along the development process. To do that we build a multisector growth model consistsing of two broad sectors, goods and services, which are composited by a formal and an informal industry. To illustrate the importance of this mechanism, we discipline the model using data from the Mexican economy and quantify how important is the changes in informal consumption to explain the observed structural transformation and changes in the size of informal employment in Mexico.
