Migration, remittances and entrepreneurship: the case of rural Ecuador

Cristian Vasco, University of Kassel

Using data from the Living Standard Measurement Survey 2005-2006 for Ecuador, this study analyses the impact of migration and remittances on the likelihood for a rural household to own a business, and the labor demands of household businesses at both the household and town level. The results show that neither migration nor remittances have any effect on the odds of family business ownership. Instead, education, credit and access to services are positively correlated with the probability of owning a rural enterprise. Regarding labor demand, the number of family members working in a business appears to be higher for those households that have at least one migrant abroad. Contrary to what expected empirical endogeneity tests (Smith-Blundell) fail to reject the null hypothesis of exogeneity of migration, remittances and town remittances with respect to the outcome variables proposed.