Abstract:

This paper investigates whether internal migration has long-term effects on conditional convergence across functional territories in Mexico. We use an instrumental variable approach based on the predictions a gravity model of internal migration between pairs of territories. Alternatively, we use networks interacted with distance between territories as an exogenous estimate of internal migration inflows. Preliminary results show that controlling for migration inflows does not appear to affect the convergence term. However, when we interact migration inflows with initial income in our growth equations appropriately instrumenting migration, results indicate that migration flows not only lead to lower growth, but they have a divergent effect as the convergence term is lower for territories that exhibit higher migration inflows. Furthermore, there appears to be heterogeneity across the territory growth distribution which could be an indicator of clubs convergence.