Economic effects of labor migration on agricultural production of farm households in the Mekong River Delta region of Vietnam

Abstract

In this article, we analyze the relationship between rural to urban migration and agricultural output in the Mekong River Delta Region of Vietnam. We use a choice-theoretic model to predict the effects of a reduction in farm hands due to migration on agricultural output. Provided remittances are reinvested, the model shows that migration may enhance household agricultural output. Based on a sample of 1,054 households, we estimate a Cobb-Douglas production function using IV. Substantial economies of scale in agricultural production with large capital elasticities suggest that the reduction of farm labor due to migration and the loss in output may be compensated by reinvested remittances. Policies facilitating migration, the flow of remittances, and their use for farm investment may contribute to reduced poverty, increased agricultural output, and reduced income uncertainty.