The Nature of Migration and Its Impact on Families in Peru

Young Lives Student Paper

The Nature of Migration and Its Impact on Families in Peru

by Christina Lees, June 2009

Click the paper title above to download a copy of the paper [PDF file 304 KB]


This paper uses Young Lives data collected on young families in Peru in 2002 and 2007. Young Lives have discovered that this demographic sample have a fairly high propensity to migrate, and therefore it is interesting to examine the impact of these movements.

Here migration is disaggregated into rural-to-urban, urban-to-rural, urban-to-urban and rural-to-rural migration and the effects of these different natures of migration on household wealth are compared. Difference-in-differences and propensity score
matching are used to overcome the bias of time-invariant unobservables, and instrumental variables are used to address endogeneity caused by time-variant unobservables. There is also a more in depth look at why migrants moved, and the extent of
relocation costs, proxied by distance.

The paper aims to test the traditional theory of migration as an investment: That households choose to migrate in order to gain net expected benefits, and that on average they succeed in doing so. Results for rural-to-urban migrant families support this hypothesis. However, in the Peruvian data there is also a significant number of families moving in the opposite direction, out of urban areas, and this appears to be correlated with a general worsening in household wealth. The result that even the average urban-rural migrant family experiences a substantial decline in wealth is inconsistent with the notion of migration as a rational choice, unless other,
perhaps more long-term, benefits of urban-rural migration outweigh the short-term deterioration in our wealth variable, or the counterfactual outcome of remaining in the urban area was expected to have been even worse, due to an unobserved adverse
shock. There is an attempt to address the endogeneity raised by the latter case, by instrumenting for urban-rural migration using previous migration, but the conclusion is that this instrument may in fact serve to reinforce the argument of reverse causality; that
former migrants are more likely to suffer from adverse shocks, which 'push' them into return migration.

See our Young Lives publications page for other papers in our student paper series.