How can migration unequalize inheritance: Theory and insights from Bolivia

Abstract

Indian communities in Latin America, like in the Middle East and other regions of the world, tend to have rules of equal inheritance. Yet, migration can transform ex ante egalitarian rules into unequal ex post practices. In this paper, based on evidence collected at both sides of the migration link in Bolivia, we find that the unequalization process caused by migration tends to paradoxically harm poor migrants from egalitarian communities who are driven to voluntarily forfeit their inheritance. To resolve the puzzle, we propose a novel theory placed in the framework of strategic exchange but where the migration decision is endogenized: upon migration, children take into account the prospect of potentially losing access to family land if they are unable to fulfill their care obligations. Voluntary exclusion from inheritance is especially likely if the value of rural public goods is low, farm output per capita is small, and the wages in the urban modern sector are high compared to those in the informal sector. The main policy implication is the following: a more equal pattern of economic growth, along both the rural–urban and the intersectoral intra-urban dimensions, helps minimize the disruption of rural families and communities, which play an important social insurance function.