1. Introduction
Migration from developing countries, and in particular from rural areas, has become a central
issue of economic development, but whether this process should be promoted or discouraged
is currently largely debated. This paper contributes to the debate shedding some light on the
potential complementarity between overseas economic opportunities and productive activities
in rural households at origin. It looks, in particular, at the economic impact of domestic and
international migration on such productive investment in sending households as the adoption
of a modern farming technology.
It is largely recognised that ‘spatially-diversified’ families represent an institution arising
from or influenced by the risky nature of rural production and the difficulties of self-insurance
in low-income, rural settings (Rosenzweig, 1988). The insurance motives for migration has
been emphasised by the New Economics of Labour Migration (NELM), according to which
greater income uncertainty may encourage out migration as a risk diversification strategy (see
Stark, O. and Levhari, D., 1982; Daveri and Faini, 1994). In this sense, better “insured”
source households - those with migrants working elsewhere - should be more able to
undertake higher-risk profitable activities than households with no migrants. Furthermore,
subsequent remittances from migrant members increase household liquidity and may
contribute to alleviate binding credit constraints in productive activities (Katz, E. and Stark,
O. 1986; Stark, 1991).
On the other hand, though, migration of people entails a loss of labour force and human
capital resources in the place of origin; this is likely to influence production choices as well,
especially in farm households in developing countries largely recognised to be highly
dependent on family labour for their subsistence. Therefore, whether the overall economic
effect of migration on rural households at origin will be positive or negative is difficult to be
predicted a priori; empirical evidence is needed to better understand the linkages between
migration and development in local communities.
This paper contributes in filling this gap by carrying out an empirical analysis on the potential
effect of migration on productivity-enhancement choices in farm households at origin. We use
cross-sectional household data from two rural regions of Bangladesh to test whether having a
migrant member is a significant determinant of the decision of source household to employ a
modern farming technology, that is high-yielding varieties (HYVs) of rice rather than
traditional ones. Production of rice is central to Bangladeshi agricultural economy and