Migration, Risk, and Liquidity Constraints in El Salvador
Natural disasters and weather conditions can affect migration decisions in many developing countries. Rural households in these countries largely rely on rain-fed agriculture for their livelihood. Variations in weather can therefore spell disaster for many households in a village at the same time, reducing informal ways of risk sharing between them and triggering migration as a way of diversifying their income sources away from agriculture and increasing their resilience.
For this reason, migration flows have been found to have a strong negative correlation with rainfall patterns in various countries. In Mexico, Munshi (2003) finds a strong negative correlation between rainfall at migrants localities of origin and migration to the United States. Similarly in Uganda, Mensah and Sulliva (2017) find that rainfall shocks serve as a strong predictor for migration from rural to urban areas, particularly for working age adults (15 to 49 years). Halliday (2006) also finds that adverse agricultural conditions increase both migration to and remittances from United States in El Salvador.
In addition to shocks causing migration of vulnerable rural households in developing countries, remittances from migrants have been found to be a key mechanism through which they cope with shocks. At a macrolevel, Ratha (2006) finds that flows of remittances from overseas buffer economic shocks in migrants' home countries. At a microlevel, Yang and Choi (2005) find that changes in household income lead to changes in remittances in the opposite direction in Philippines. Remittances from migrants in urban areas or in other countries allow households to maintain their levels of investment and consumption when shocks occur, preventing negative coping strategies such as pulling children out of school or skipping meals that have a long term impact on their livelihood.
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