Working Paper

Labor Migration, Capital Accumulation, and the Structure of Rural Labor Markets

Taryn Dinkelman, Grace Kumchulesi, and Martine Mariotti

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Can migrant capital contribute to long-run structural change in sending community labor markets? We study how rural labor markets in Malawi changed after exogenous shocks to international labor migration opportunities. Merging archival data on sub-
national remittance flows with census data on employment, we track how work shifted across sectors in places receiving different amounts of migrant earnings as a result of the shocks. In labor markets receiving more migrant capital, workers - particularly women - moved out of farming and into more capital-intensive non-farm service sectors over the next thirty years. High migrant capital areas accumulated more non-farm physical capital and human capital, and were wealthier fifteen years after the migration episode. Our results demonstrate that temporary international migration and the associated remittances have the potential to change rural labor markets in the long run.

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