Paper short abstract:

This paper present a detailed analysis of the effects of remittances and migration on labor force participation and the investment in order to discuss the relationship among development, remittances and migration circuits in two countries in the South of Latin America, Bolivia and Paraguay.

Paper long abstract:

This paper aims to understand the effects of migration and remittances, two interconnected processes but rooted in different causalities; on the sending areas in two countries in the south of Latin America, Bolivia and Paraguay. The general view among analysts and the public is that out-migration has positive effects for sending countries because it provides a safety valve to poverty and unemployment. However a number of scholars from the global South argue that migration is not only a symptom of underdevelopment, but a consequence and a cause of it.

We will focus on the particular case of Paraguayan and Bolivian migration as these migration streams constitute a little researched case of south-south migration. In Paraguay and Bolivia the remittances come mainly from Argentina and Brazil (from the Global South) but also from USA and Spain (from the Global North). This is interesting to develop comparisons between different migration systems. We want to study whether migration, from Bolivia and Paraguay has had developmental effects in these two countries. Also, we want to investigate whether the effects of remittances are equal in these two countries (Bolivia and Paraguay).

The information used comes from two sources: the Permanent Household Survey (EPH), a nationally-representative household of Paraguay and Bolivia (2010) and data from the World Development Indicators (WDI). Analytical work on the impact of remittances is complex due to the intrinsic endogeneity and selection bias involved in decisions surrounding migration and remittances. To meet these various methodological challenges we perform propensity score matching.