Extending the “voting with the feet” proposition: the impact of local economic development actions on immigration across Mexican municipalities

Abstract

Tiebout's “voting with the feet” proposition directs attention to the role of local authorities in delivering public services, and the implications of their decisions in people's choice of place of residence. Similarly, the bottom-up approach to economic development places a relevant role of local governments in promoting higher standards of living. By considering the latter, the former can be extended as citizens can choose a jurisdiction not only on the basis of a combination of taxes and public services but a broader mix of public goods. This paper analyses the effects of the fundamental features of the bottom-up or local economic development (LED) approach on population mobility among Mexican municipalities. This study finds significant evidence of a positive impact of LED elements on immigration during the period between 1990 and 2005.

Keywords:

• local economic development
• Mexico
• immigration
• public policy
• Tiebout
• decentralisation

Notes

1 According to North (1990, 1991), formal institutions refer to the prevailing legal setting conformed by constitutions, laws and consequent rules, while the informal institutions to informal limits such as codes of conduct, traditions, taboos, rituals and habits.

2 This information refers to own resources, if any, assigned by the municipality to these purposes as INEGI separates this database entry from the application by municipal authorities of federal and state resources, subsidies and other allowances. Data source: INEGI website: http://www.inegi.org.mx/sistemas/olap/proyectos/bd/consulta.asp?p=10961&c=23707&s=est&cl=4 (retrieved November 18, 2012).

3 As this analysis builds on the paper by Rodríguez-Pose and Palavicini-Corona (2013) which for the first time assessed quantitatively the impact of LED constituents on the development of places, some interactions of variables presented here were originally proposed by them. The sum of variables is proposed to capture the effects of the consideration of LED constituents in a more comprehensive way; while their multiplication tries to identify their complementarity as commonly understood in the econometrics literature (Agresti & Finlay, 2009; Greene, 2003).

4 Retrieved August 30, 2012, from http://www.inegi.org.mx/est/contenidos/Proyectos/ccpv/default.aspx

5 All the findings presented in this paper are after correcting for multicollinearity and leaving out non-significant control variables except for the one which tries to capture the effect of the overall socioeconomic situation of municipalities in 1990.

6 The change in the MDI between 1990 and 2005 was not included as an independent variable to avoid autocorrelation problems.