Self-Employment as an Attachment Mechanism for the Population in Mexico: the Case of Four Localities

Abstract

The data yielded by a survey undertaken in four urban localities in Mexico served as the basis for this article, which suggests that self-employment is a useful mechanism for encouraging the population to remain in its community of origin. It also shows that self-employment in the manufacturing sector, particularly the kind requiring investment in physical capital, is able to counteract the power of social networks to expel the population. The econometric estimate is carried out using instrumental variables and in two stages, to take into account the problem of endogeny that may be caused by the possible two-way link between migration and self-employment. The results suggest that government support to finance micro-businesses may help stem the migratory flow to the United States.