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Migration, remittances and entrepreneurship: The case of rural Ecuador

Abstract:

Using data from the Living Standard Measurement Survey 2005-2006 for Ecuador, this paper analyzes the impact of migration and remittances on the likelihood of rural households owning a business. The results show that neither migration nor remittances have any effect on the odds of a household owning a rural business. Instead, education, credit and access to services are positively correlated with the probability of owning a rural enterprise. Contrary to expectations, empirical endogeneity tests (Smith-Blundell) fail to reject the null hypothesis of exogeneity of migration, remittances and average town remittances with respect to the likelihood of business ownership.