Human Capital: Migration and Rural Population Change

The movement of labor out of agriculture is a universal concomitant of economic modernization and growth. Traditional migration models overlook many potential interactions between migration and development. Given imperfect markets characterizing most migrantsending areas, migration and remittances can have far-reaching impacts, both positive and negative, on incomes and production in agricultural households. Linkages through product and factor markets transmit impacts of migration from migrant-sending households to others inside and outside the rural economy. Recent theoretical and empirical studies reveal the complexity of migration determinants and impacts in rural economies, and they point to new arenas for policy intervention. Chapter for Handbook of Agricultural Economics, Bruce L. Gardner and Gordan C. Rausser, eds., to be published by Elsevier Science, New York. Corresponding Author Information: J. Edward Taylor Department of Agricultural and Resource Economics University of California Davis, CA 95616 530 752-0213 FAX: 530 752-5614 [email protected] Acknowledgements: Various components of this research were supported by the William and Flora Hewlett Foundation, the Rosenberg Foundation, the Giannini Foundation of Agricultural Economics, the Kellogg Foundation, and by a USDA National Research Initiative grant. We are indebted to Sheila Desai, Mimako Kobayashi, Pauline Griego, and two anonymous referees. Human Capital: Migration and Rural Population Change The migration of labor geographically, out of rural areas, and occupationally, out of farm jobs, is one of the most pervasive features of agricultural transformations and economic growth. This is true both historically in developed countries (DCs) and currently in less-developed countries (LDCs). Among nations, the share of rural population declines sharply as per-capita incomes increase (Figure 1), from 70 to 80 percent in countries with the lowest per-capita GNPs to less than 15 percent in the highest-income countries. The share of the national workforce in agriculture plunges even more sharply (Figure 2), from 90 percent or higher in low-income countries to less than 10 percent in high-income countries. Developing countries from Mexico to India have experienced dramatic declines in their rural population shares over the past 3 decades, despite significantly higher rates of natural population growth in rural than in urban areas. As internal migration redistributes populations and workforces from rural to urban areas, many countries--including those with the world's most dynamic fruit, vegetable, and horticultural crop production--turn to foreign-born migrants, frequently of rural origin, for labor. In the United States, for example, an estimated 69 percent of the 1996 seasonal agricultural service (SAS) workforce was foreign-born (Mines, Gabbard, and Steirman, 1997), and in California, far and away the nation's largest agricultural producer, more than 90 percent of the SAS workforce was foreignborn. The majority (65 percent) of these migrant farmworkers originated from households in rural Mexico. The world's great migrations out of rural areas are accelerating, making internal and international migration potentially one of the most important development and policy issues of the 21st Century. The most populous countries also are among the most rural (Figure 1). The greatest migration potential is in China, where 71 percent of the population is rural and an estimated onethird of the rural labor force of 450 million is either unemployed or underemployed. Despite barriers to labor mobility imposed by China’s household registration (hukou bu) system, China currently has more migration than anywhere else, with between 50 and 100 million rural-to-urban migrants (Roberts, 1997). Meanwhile, in high-income countries, farmers, with their reliance on foreign-born migrant workforces, find themselves at odds with an increasingly restrictionist public and policy stance towards immigration. The determinants of migration and migrants' impacts, both on migrant-sending areas and on the rural communities that receive them, have been the subject of a prolific and growing literature in agricultural and development economics, a centerpiece of public-policy debates, and a source of sharpening controversy and anxiety in migrant "host" countries and communities. The determinants of out-migration from rural areas and the impacts of this migration on rural areas are the focus of this chapter. Part I presents a critical synthesis of theories of the determinants of migration out of rural areas, with a focus throughout on the implications of these theories for empirical analysis of migrant labor supply. It starts out with the (mostly implicit) role of migration in classical, two-sector models, in which the rural sector is characterized as having redundant or surplus labor, then presents