Does rural outmigration affect investment in agriculture? Evidence from Ethiopia

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This paper investigates impacts of rural outmigration on household spending in agriculture. Empirical data come from two rounds of panel surveys of households living in three major regions of Ethiopia. Accounting for potential endogeneity of outmigration and selection bias using a combination of a difference-in-difference (DID) model and an inverse-probability of treatment weighting (IPTW) approach, we find that, on average, rural outmigration has significantly increased probabilities of spending on herbicide and livestock by 10 and 20 percentage points, respectively. At the intensive margin, we also find outmigration has significantly increased the amount of household spending on herbicide and livestock by around 62% and 246%, respectively. However, our findings suggest differential impacts of outmigration based on age of the household head, especially on the likelihood of purchasing livestock.

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