Untitled-7 Emigration and Economic Crisis: Recent Evidence from Uruguay Adela Pellegrino Andrea Vigorito Universidad de la República ABSTRACT Uruguay is one of the South American countries with a significant proportion of population living abroad. Since the 1970s, it has had net emigration. Although this trend weakened considerably in the early 1990s, the momentum was regained with the advent of a severe economic crisis in 1999. This article discusses the characteristics of recent Uruguayan emigration, and it provides evidence of the relationship be- tween economic crisis and emigration. The volume of population outflow in 2002 was comparable to the waves of emigration that took place in the 1970s. College- educated emigrants are overrepresented when compared to the general population. Having access to networks of Uruguayan emigrants in destination countries corre- lates with the probability that a household had a member who emigrated in 2002. Keywords: 1. international migration, 2. economic crisis, 3. skilled migrants, 4. South America, 5. Uruguay. RESUMEN Uruguay es uno de los países sudamericanos con una proporción significativa de su población viviendo en el exterior. Desde los años setenta, el país ha tenido una emi- gración neta. Aunque esta tendencia se debilitó a principios de los noventa, recobró fuerza con la llegada de una severa crisis económica en 1999. En este artículo se discuten las características de la migración reciente de uruguayos y se pone en eviden- cia la relación entre crisis económica y emigración. El volumen del flujo poblacional en 2002 es comparable con las olas de migración que tuvieron lugar en los setenta. Los emigrantes con educación universitaria están sobrerrepresentados en compara- ción con la población general. Existe una correlación entre el acceso a redes de emi- grantes uruguayos en los países de destino y la probabilidad de que un hogar haya tenido un miembro que emigró en 2002. Palabras clave: 1. migración internacional, 2. crisis económica, 3. migrantes califica- dos, 4. América del Sur, 5. Uruguay. MIGRACIONES INTERNACIONALES, VOL. 3, NÚM. 1, ENERO-JUNIO DE 2005 58 MIGRACIONES INTERNACIONALES In 1998, after almost ten years of continuous economic growth, the Uruguayan economy began to enter a severe economic recession. An acute crisis in the financial system triggered the decline to the low- est point, which was reached in 2002. That year, per capita GDP fell by 11.4% compared to the previous year, and the exchange rate plummeted by approximately 90%. The recession also severely af- fected the unemployment rate, which reached its highest point in 20 years. The limited data on migration that is available for recent years suggests that a major wave of new emigration occurred during the economic crisis. The mass media took notice, as did academics and politicians. In spite of that interest, no specific studies were done nor are statistics available that permit an accurate assessment of re- cent migration. Although migration is a very important issue in Uruguay, the data available to study it is extremely poor. One possible explanation for that shortcoming is that the absolute number of Uruguayan emigrants is low compared to other countries, even though the proportion of emigrants relative to the Uruguayan population as a whole is among the highest in South America. Consequently, researchers in the destina- tion countries do not place much emphasis on Uruguayan migration. The same is true of the Uruguayan government and the Instituto Nacional de Estadística, the official body that collects statistical data on the coun- try: The last migration survey was in 1982. This article aims to provide an estimate of the extent of recent emi- gration from Uruguay, and to examine its main socioeconomic charac- teristics. We also provide evidence of the willingness to migrate that exists on the part of individuals still living in their household of origin, and we compare the socioeconomic profile of households that have members who are likely to emigrate with those households that have had recent emigrants. This study is based on micro-data from the December 2002 World Bank survey, Encuesta de Caracterización Social (Social Characterization Survey, ECS). The sample covered 2,500 households in urban areas, where 90% of the Uruguayan population is located. This is the only source of data available to study recent population outflows in Uruguay. The ECS aimed to record the effect of the 2002 financial crisis on household well-being and to identify the strategies Uruguayan households adopted to cope with the crisis. A set of questions on migration was included in order to estimate the extent of international emigration in households and to identify the characteristics of recent migrants. Consequently, our data set lacks information on households that emigrated en bloc. Households answered questions on emigration that occurred between EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 59 March 1 and November 30, 2002,1 and, in order to compare past and present emigration, a small set of questions for all women over 12 years of age was included. We begin by presenting the characteristics of the data and the tech- niques used in our analysis. In order to place the current migratory wave in a broader framework, we then briefly review the history of Uru- guayan emigration. Next, we provide information on the magnitude of recent emigration, including the characteristics of international emi- grants. In order to assess which households were most likely to have emigrants among their members, we performed a multivariate analysis, which we discuss in the fourth section. In the fifth section, we examine the willingness of current residents of Uruguay to migrate. Methodology The ECS surveyed urban households in Uruguay in December 2002 to assess the impact of the economic crisis on household well-being. For each household, the broad questionnaire gathered information on mem- bers, the type of dwelling, living strategies, past and present employ- ment status, current income, and internal household division of labor. Interviewers visited 2,500 households. As with the Encuesta Con- tinua de Hogares (Continuous Household Survey, Instituto Nacional de Estadística), the sample frame of ECS was the 1996 population cen- sus for capital cities in the 19 political administrations, or departments (departamentos), into which Uruguay is divided. Sampling occurred in two stages. In the first, the sampling units were census tracts, and in the second, households. The first stage used four income strata in Montevideo: low, middle-low, middle-high and high income. The met- ropolitan area surrounding Montevideo was divided into three strata: the area around San José, the Ciudad de la Costa, and the area around Canelones. A single stratum was used for the rest of the country. The two-stage procedure was applied to each stratum and departmental capi- tal. In the first stage, census tracts were selected with approximate prob- ability proportional to the area size, based on the 1996 census. In the second stage, four households were chosen in each selected area (see Table 1 for the approximate levels of precision in the ECS). A probit model was estimated in order to identify household charac- teristics associated with the probability of having a member who emi- grated. We built a binary variable (Y) with the value 1 if someone in the household emigrated between March 1 and November 30, 2002. We 1 March 2002 has been identified as the start of the economic crisis, and it was used as a benchmark date in the ECS to compare household well-being. Although poverty was on the increase before 2002, it accelerated significantly during the crisis. 60 MIGRACIONES INTERNACIONALES can express the probability that a household had one or more members emigrating in that period as: where ϕ is the normal distribution function, β is a vector representing the correlated variable coefficients, and x is a vector of correlates. Since the model parameters do not correspond to marginal effects of the correlates on the dependent variable, marginal effects for continu- ous variables were calculated estimating the following expression: These calculations used average values of the correlates. In the case of binary variables, we calculated the marginal effect by subtracting the average value of the function (evaluated at the average values of the remaining variables) for the values of the variable (0 and 1). It should also be borne in mind that information is lost when marginal effects are calculated using the average, as it is possible that they are subject to significant dispersion across the distribution. Finally, the adjustment of the model can be examined computing a pseudo R2 or McFadden’s R2, assessing the proportion of correctly pre- dicted values or using the log-likelihood ratio. Previous Uruguayan Emigration: Features and Interpretations Uruguay is one of the smallest South American countries, both in area (177,000 km2) and population (3,400,000). Over the last three decades, Table 1. ECS Approximate precision levels for a confidence interval at 95%. Proportion 20 25 30 50 0.1 0.0056 0.0071 0.0085 0.0141 0.15 0.008 0.01 0.012 0.02 0.2 0.01 0.0125 0.015 0.0251 0.25 0.0118 0.0147 0.0176 0.0294 0.3 0.0132 0.0165 0.0197 0.0329 0.35 0.0143 0.0178 0.0214 0.0356 0.4 0.015 0.0188 0.0226 0.0376 0.45 0.0155 0.0194 0.0233 0.0388 0.5 0.0157 0.0196 0.0235 0.0392 Source: World Bank (2004). )()/1(Pr xxYob βϕ ′== [ ] (/ k x x xyE βϕ ′=      ∂ ∂ EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 61 it has had one of the highest percentages of population living abroad of any country in the region. Uruguayan migration has distinctive charac- teristics even though it is part of a general trend that has seen South Americans leaving the region since the early 1960s. Some of these fea- tures are the result of the particular demographic and social characteris- tics that distinguish Uruguay from other Latin American countries. Uruguay’s first demographic transition started during the last decades of the nineteenth century (Barrán and Nahum, 1982; Pollero, 1994) when Italian and Spanish immigrants were flooding into the country. Despite the arrival of these immigrants, population growth was low throughout the twentieth century, so Uruguayan emigration cannot be related to demographic pressure. Moreover, Uruguay’s educational re- form at the turn of last century resulted in a low illiteracy rate, giving the country one of the most highly educated populations in the region. Education was an important route to social mobility, and a solid middle class formed. Finally, despite frequent economic crises in the second half of the twentieth century, Uruguayan social and welfare indicators have been among the best in Latin America. Low economic inequality and a limited incidence of poverty are distinctive features of the coun- try compared to the rest of the region (ECLAC, 2002). Of all South American countries, Uruguay had the highest propor- tion of immigrants during the nineteenth century and the first half of twentieth, most coming from Southern Europe. Similar to Argentina and southern Brazil, the foreign-born portion of the Uruguay’s popula- tion was very high, 30% in 1850 and 17% around 1910 (Camou and Pellegrino, 1993). Additionally, because Uruguay is located between those two countries, which are South America’s largest nations, popula- tion outflow through those borders was common. In the 1930s, with industrialization and concentration of economic activities in certain urban centers, urbanization became an increasingly important trend in Latin America. The expanding employment opportunities in the cities attracted Uruguayans, and people moved primarily to Monte Video and also to Buenos Aires. In the late 1960s, household well-being in Uruguay declined as real wages fell and unemployment rose. This marked the beginning of large- scale emigration, and for the first time, net migration was negative. Although Argentina and Brazil, where some Uruguayans had settled previously, were the main destination for this first migratory wave, a new trend saw considerable numbers of emigrants heading for distant destinations, such as the United States, Australia, Venezuela, Mexico, and to a lesser extent, some European countries. An easing of immigra- tion regulations in the United States, and the demand for workers in manufacturing and services there, stimulated migration from Latin 62 MIGRACIONES INTERNACIONALES America. Australia also became an important destination because of an official program aimed at recruiting Uruguayan workers. In this period, most emigrants were manufacturing workers (Teja and Wonsever, 1985; Pellegrino, 1989). In the early 1970s, Uruguay’s poor economic performance height- ened social tensions and fed a political crisis that resulted in the 1973 coup d’état. The country was subsequently under a dictatorship until 1984. In that period, emigration rose considerably. Many trade union- ists, political activists, and intellectuals became political exiles, and the new military regime also adopted economic measures aimed at improv- ing the international competitiveness of Uruguayan products, causing a major decline in real wages (Melgar, 1979). Consequently, many semi- skilled workers also emigrated, leading to a very significant population outflow (Table 2). Table 2. Net migration in Uruguay, 1950-1996. Net migratory balance Period (in thousands) % of population 1950-1955 10 0.4 1955-1960 20 0.8 1960-1964 -6 -0.2 1965-1969 -30 -1.1 1970-1974 -147 -5.2 1975-1979 -128 -4.5 1980-1984 -42 -1.4 1985-1996 -39 -3.2 Source: 1951-1964: Celade, 2004; 1965-1984: Niedworok and Fortuna, 1985; 1981-1985: Celade, 2004; 1985-2000: Cabella and Pellegrino, 2004. The return to democracy did not meet expectations. Since 1986, poverty rates in Uruguay have exhibited a U-shaped pattern, declining until 1994 and rising since then. Most explanations point to increased labor-market inequality and unemployment and a 1990 reform in the mechanism for pension adjustment as the key variables underlying in- creased rates of poverty (Vigorito and Melgar, 2000). Although the end of the military government in 1985 led to a small inflow of former emigrants—mainly those considered political exiles— emigration has become a permanent option for the Uruguayan popula- tion. Estimates based on 1996 population census data reveal that emi- gration had continued even though the number of people leaving fol- lowing the democratic restoration was lower than in previous decades. Since 1999, the economic recession in other South American countries has hit Uruguay hard. Many analysts consider this latest crisis the worst EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 63 in modern Uruguayan history (Instituto de Economía, 2003). The low- est point was in 2002 when, in the wake of the Argentine crisis, the local financial system collapsed and the Uruguayan economy went into a se- vere recession. The Uruguayan peso was devalued by 90%, which then caused serious inflation. GDP fell by about 11.4% in 2002 compared to 2001, and unemployment climbed to figures even higher than during the 1982-1983 crisis. In 2003, economic activity showed some signs of recovery and unemployment fell 2 percentage points from the 2002 fig- ure. Meanwhile, household well-being also severely eroded (Table 3). Table 3. Average household income, poverty incidence, and income inequality in urban Uruguay, 1991-2003. Index 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Average per capita household income (1991 = 100) 100.0 125.0 108.2 115.4 111.1 110.1 111.6 119.2 118.7 115.9 111.0 97.8 Poverty incidence 25.5 23.1 21.4 20.2 22.5 23.5 24.6 24.7 22.2 25.1 27.3 32.5 Gini inequality index 40.2 41.2 37.8 39.8 40.2 41.3 41.7 42.4 43.0 43.9 43.8 44.4 Source: Authors’ calculations based on ECS micro-data. As a consequence of increasing inflation and rising unemployment, average household income fell almost 20% in real terms. Economic inequality also increased because loss of income was not evenly distrib- uted across the income strata, and the probability of being unemployed was inversely related to educational levels (Amarante and Arim, 2003). Therefore, income poverty rose during the crisis, and despite the be- ginnings of a recovery in 2003, it grew even more in that year. At the same time, a new migratory wave that represented a sizeable pro- portion of the population has left the country. Although people have specu- lated about characteristics of this emigration and have estimated its magni- tude based on the exit-and-entry register at Carrasco, Uruguay’s international airport, there is scant empirical evidence to test these suppositions. There is no evidence that population outflows as a response to the severe economic crisis in 2001-2002 are unique to Uruguay. Argentina has had simultaneous immigration and emigration, but no evidence is available to test whether the 2001 economic crisis significantly acceler- ated Argentine emigration. Previous Research Findings Uruguayan emigration has been analyzed from economic, social, and political perspectives. According to Gerónimo de Sierra (1979) and Is- 64 MIGRACIONES INTERNACIONALES rael Wonsewer and Ana María Teja (1985), the single factor most af- fecting emigration was real wages rather than unemployment. These authors also concluded that, in addition to the economic crisis, Uru- guayans realized that the model of an open and democratic society with opportunities for social mobility—which had characterized Uruguayan society in the first part of the twentieth century—no longer existed. Carlos Filgueira (1990) stated that the erosion of conditions in the economy produced downward mobility, and this generated political and cultural responses: “The reasons for significant international emi- gration are to be found, then, in long-term cumulative processes, which created deeply rooted attitudes and expectations that were frustrated in broad sectors of the population. The relationship between the population’s expectations and aspirations and real possibilities of satis- fying them are more serious in Uruguay than in most Latin American countries.” This “structural tension” is visible, for example, in the ef- fects of education and urbanization as “factors legitimating aspirations in contrast with income rigidity” (1990:16). In addition to the domestic factors, factors related to the destination countries also play a role. In Argentina, the principal destination of Uruguayan emigrants in the 1960s and 1970s, the demand for labor increased considerably in that period, and wages were higher than in Uruguay. In 1973-1974, the Argentine government implemented poli- cies to attract immigrants, and it opened its borders to the populations of neighboring countries. This situation was reversed in 1976 when a military government came to power and many immigrants were de- ported, particularly those from Bolivia. Uruguayan emigration to Brazil has been quantitatively lower, but it is still significant qualitatively. During the 1970s, military governments implemented policies to provide incentives for scientific and techno- logical development, and they protected technology-intensive manu- facturing sectors. This resulted in an inflow of qualified immigrants from elsewhere in the region, including Uruguay. Other countries, such as Venezuela and Mexico, also had favorable entry conditions and of- fered employment opportunities and higher wages, which encouraged migration, despite the long distances involved and higher travel costs. Finally, developed countries, particularly the United States, were also at- tractive because of the availability of good-paying jobs, which let Uruguay- ans meet the expectations they held, based on their high educational levels. However, internal pressures from the Uruguayan economic crisis were not the only reasons for emigration to the United States and Canada, and “re- turn” emigration to Europe by Uruguayan offspring of European immi- grants. Increased demand for labor in the United States and Europe has led to the implementation of policies in those countries aimed at recruiting EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 65 immigrants, and consequently, increased emigration to those places has been evident not only from Uruguay but also from other countries.2 Regarding emigration, after 1999, Uruguayans responded just as they had in the 1970s, and that reflects the consolidation of Uruguayan com- munities in the destination countries, the existence of which has propa- gated further emigration. Interviews with emigrants testify to the key role played by family networks as stimuli for migration (Pellegrino, 2002). Networks linking emigrants to their countries of origin enable the shar- ing of information and assistance, in a sort of feedback loop, further stimu- lating population movement (Massey and García España, 1987; Gurak and Caces, 1992; Massey et al., 1993, 1997). Gunnar Myrdal originally formulated the cumulative causation theory in 1957, and Douglas Massey revisited it several decades later (Massey et al., 1998). According to this view, migration is a path-dependent process that modifies the social con- text in which household and individual make decisions, even long after the original causes for the migration have vanished. For example, in com- munities in the country of origin, the demonstration effects of emigrants’ economic success propagates new migratory options and simultaneously contributes to changed values and perceptions. Comparative evidence is inconclusive about why people are more likely to migrate in certain countries than in others. Some authors agree that a single theory cannot explain international migration (Massey et al., 1998). From a wider perspective, historical contexts arguably create conditions that make some populations more prone to migrate. Although there are underlying economic and demographic factors that serve as the basis for population movements, we must also consider other reasons, such as po- litical conflict, wars, natural disasters, and so forth. Whatever the economic causes that make a population prone to mi- grate, the fact that a considerable number of Uruguayans live abroad establishes links and allows for network creation, and this makes emi- gration a feasible alternative for people facing a national economic crisis that results in diminished well-being at the household level. Recent International Migration from Uruguay As mentioned above, no official data sources exist that are designed to identify the extent and characteristics of Uruguay’s recent migration. The most current population census in Uruguay dates from 1996, and data with detailed information from some of the main destination coun- 2 In some cases, workers were actively recruited. Adela Pellegrino (2002) interviewed emigrants who went to the United States in the 1960s and 1970s. They reported that personnel selection companies came to Montevideo to recruit qualified blue-collar work- ers for manufacturing and construction firms in New Jersey. 66 MIGRACIONES INTERNACIONALES tries’ censuses have not yet been published. Border-crossing records are not detailed enough to make a reliable evaluation. One can glean an idea of the extent of recent migration from the exit-and-entry register at Carrasco, Uruguay’s international airport. These data show a small overall negative balance (entries minus exits) for the 1990s. In 2000 and 2001, net migration jumped to around 20,000 per year; in 2002, it was nearly 29,000; and in 2003, it was 24,000.3 Here, based on the ECS, we provide a rough estimate of the size of the 2002 emigration, and we try to identify the main characteristics of recent emigrants. Next, considering that previous migratory waves were a nonrandom sample biased toward young male and semi-skilled and highly skilled workers, we try to determine which household character- istics are correlated to the probability of migration, in an attempt to identify the socioeconomic sectors that emigration most affects. Estimated Size of the 2002 Wave of Emigration According to the ECS data, 3.86% of urban households have at least one member who emigrated from Uruguay between March 1 and November 30, 2002.4 Applying this figure to the urban population yields a rough estimate of 33,000 emigrants during the nine months covered by the sur- vey. Based on the evidence presented above, it appears the Uruguayan emi- gration has increased significantly since the beginning of economic reces- sion in 1999. The departure rate (12.3 people per 1,000) is comparable to the outflows in the 1970s. To determine the absolute number of emi- grants, one can compare the departure rate to the natural annual increase of the Uruguayan population (the difference between births and deaths), which in recent years has been between 20,000 and 22,000 people. 3 The decline in the number of exits in 2003 might be linked to tougher visa require- ments set by the United States in the May of that year. 4 Estimating the number of emigrants is not an easy task. The simplest procedure is to take the difference between the recorded population in the last census and the current census minus the estimated population growth from natural increase over the inter-census period, which gives a rough estimate of emigration. Border registration is another method: the difference between entries and exits may give as rough approximation of the net number of migrants (immigrants or emigrants). Using data on foreign-born popula- tions in destination countries may also improve estimations. Jorge Somoza (1981) and Alan Hill (1981) proposed two “indirect methods” to estimate international migration. Somoza proposed including a question to mothers in the census questionnaire, asking them about the present residence of surviving children. In Hill’s method, the question about emigrants in the family is directed to brothers and sisters. Corrections using mortal- ity rates and estimates of the number of complete family groups that have emigrated are required in order to estimate the total number of emigrants. The number of cases in our sample does not allow us to use Somoza’s methodology on mothers, because cases in each cell are scarce. We have opted to use household information to estimate the number of people who emigrated from March through November 2002. EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 67 Meanwhile, 6.9 percent of the mothers interviewed stated that they have offspring living abroad. However, a significant number of mothers might have already joined their migrant children living abroad. More- over, only surviving mothers are surveyed, so the older an emigrant, the higher the probability that his or her mother is deceased. Unfortu- nately, the emigration estimates cannot be adjusted based on the ma- ternal mortality rates because the ECS sample size is too small. Main characteristics of recent migrants from Uruguay Today, Uruguayan emigrants are mainly young adults who are going to join the labor force in the country of destination, a characteristic shared with previous Uruguayan emigrants and with emigrants from other Latin American nations (Table 4). Among emigrants in the oldest age group, family reunification is presumably a factor. Qualitative fieldwork has shown that once settled in the destination country, young emigrant couples who have children may persuade one of the grandmothers to join them, to help in rearing children and with housekeeping while young adults work outside the home (Fortuna et al., 1989). Table 4. Recent emigrants, by sex and age group, March-December 2002. Age group Percent 0 to 29 54.3 30 to 44 27.1 45 to 59 9.3 60 and over 9.3 Total 100.00 % male emigrants 54.6 N=180 Source: Authors’ calculations based on ECS data. With regard to educational achievement, census data available in the main destination countries have shown that the people in the migra- tory waves of the 1970s and 1980s were better educated than the over- all population living in Uruguay, although the degree varied depending on the destination country. The average educational level of Uruguayan immigrants living in Argentina was similar to that of Uruguay’s popu- lation (Table 5), whereas those living in the United States, Venezuela, and Brazil had higher educational levels (Pellegrino, 2001). Previous studies that gathered census data from the 1980s and 1990s for various countries also show that approximately 10% of Uruguayan university graduates had settled in other Latin American countries or the United States (Pellegrino, 1993; Pellegrino, 2001). 68 MIGRACIONES INTERNACIONALES Table 5. Characteristics of Uruguayan-born individuals by country of residence, census data circa 1990. United Venezuela Argentina Chile Paraguay Brazil States Uruguay Total population 5,454 133,653 1,599 3.029 22,141 18,211 3,163,763 Average age 37.9 38.3 34.87 34.3 38.6 34.0 Sex ratio 108.6 95.6 102.4 127.2 115 106.1 93.9 Educational attainment 10 or more years(%) 64.3 40.2 78.29 61.8 47.8 81.2 26.7 Males 66.1 38.9 79.15 61.4 51.7 81.6 24.5 Females 62.3 41.5 77.41 62.2 43.4 80.8 28.7 Employment status % labor market participation 66.8 68.4 53.4 64.2 59.8 76.2 57.0 Males 86.2 88.1 72.7 82.0 81.5 87.9 70.6 Females 45.5 49.5 33.9 41.2 35.1 63.9 44.6 Source: Pellegrino, 2001. The same phenomenon currently prevails to the extent that recent emi- grants 18 years of age and older are relatively highly skilled compared to the same cohort living in Uruguay (Table 6). This particularly interesting since returns to skill have been rising in the last 12 years (Amarante and Arim, 2003). The explanation for this apparent paradox may be that despite the increase, returns to skill remain lower than in most Latin American countries (World Bank, 2003) and when compared to purchasing power in developing countries, the returns to skill are significantly lower in Uruguay. Table 6. Educational attainment of urban Uruguayan emigrants aged 18 or over, March-December 2002. Primary Secondary No Age group schoola schoolb College c response Total Emigrants 18 to 44 15.2 52.6 36.4 3.1 100.0 45 and over 14.3 42.9 40.0 2.9 100.0 Total 16.7 41.7 25.0 16.7 100.0 N=180 Non-emigrants 18 to 44 18.1 57.9 23.4 0.6 100.0 45 and over 47.7 35.5 16.3 0.7 100.0 Total 31.2 47.9 20.3 0.6 100.0 N=6527 Source: Authors’ calculations based on ECS micro-data. aUp to six years of schooling; bseven to 12 years of schooling; cmore than 12 years of schooling. EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 69 According to George Borjas (1999), we can assess the economic im- pact of migration by considering the relative skills of emigrants and the extent to which they send remittances to their country of origin. If emigrants are skilled workers, the consequence can be an increase in returns to skill in the country of origin. Unfortunately, the ECS did not gather data on labor force participation among emigrants. Another distinctive feature of the recent emigration relates to the coun- tries of destination. Although Uruguayan emigration to the United States, Europe, and Australia grew significantly during the 1970s and 1980s, half of the emigrants during that period went to Argentina and 7.2% to Brazil (DGEC, 1982). This changed considerably in 2002. According to ECS, one-third of recent emigrants went to the United States, another one-third went to Spain, and 4.7% went to Italy, whereas only 8.5% migrated to Argentina. Although we only have a cross-sectional survey to assess the desti- nation countries for recent migrants, and we cannot tell whether these new destinations indicate a trend, some facts are congruent with the idea that since 1999, moving to Argentina has not been an attractive option for Uruguayans. The reasons for this are to be found in the regional crisis: Argentina—the main destination of Uruguayan emigrants for three decades—has been suffering from high unem- ployment rates and a sharp decline in real wages. Brazil is also expe- riencing an adverse economic situation, although it is less acute. Additionally, Australia has changed its immigration policy, and cur- rently, Uruguayan-born workers have great difficulty obtaining a residence visa. Thus, the United States and Spain are the main poles of attraction for South American workers. In the last decade, the numbers of immi- grants to both countries has increased significantly. According to 2000 census data, during the 1990s, the number of Uruguayans living in the United States remained steady. However, when we take into account that the ECS data show that the United States was one of the main destinations of the recent wave, it is probable that the number of Uru- guayan immigrants in the United States has increased.5 In Spain, the 2001 population census recorded 24,600 Uruguayan-born residents (Table 7), which shows that Spain has became a popular destination. Regarding Argentina, census data show a decline in the total number of Uruguayans living there, which is in line with the results of the ECS survey. However, Argentina has the highest accumulated total of Uru- guayan emigrants. 5 Because the Current Population Survey and the American Community Survey are not useful instruments, it is impossible to track the number of Uruguayan immigrants in the United States. 70 MIGRACIONES INTERNACIONALES Table 7. Uruguayan-born persons living in foreign countries recorded in censuses circa 1960, 1970, 1980, and 2000. Country 1960 1970 1980 1990 2000 Argentina 53,974 58,300 109,724 133,453 117,564 Brazil 11,380 13,582 21,238 22,143 24,740 Costa Rica 71 201 1,272 Chile 759 989 1,599 2,241 Mexico 1,553 1,097 4,387 Paraguay 763 2,310 3,029 3,332 Venezuela 793 7,007 5,454 4,266 Australia 1,880 9,287 9,690 9,709 Canada 4,160 5,710 5,955 United States 5,092 13,278 18,211 18,804 France 1,584 2,000 Sweden 71 2,101 2,427 2,275 Spain 3,755 3,174 24,626 Italy 918 1,219 Israel 440 Source: Pellegrino et al., 2003. The reasons for recent emigration are clearly related to the poor labor market (low wages and unemployment), which affects even the rela- tively well educated (Table 8). As schooling increases, the probability declines that unemployment will cause an emigration, but the prob- ability increases that the cause will be low wages. Seeking a better qual- Table 8. Main reasons for emigration, according to statements of relatives of recent emigrants (urban areas), March-December 2002. Primary Lower second- Upper schoola ary or technic- secondary Reason cal schoolb schoolc Colleged No data Total Low income 0.0 10.3 11.1 26.8 16.7 15.8 Unemployment 50.0 62.1 52.8 39.0 50.0 50.0 Study abroad 0.0 0.0 0.0 4.9 0.0 1.7 Marriage 0.0 6.9 8.3 9.8 0.0 7.5 Family reasons 12.5 10.3 2.8 2.4 0.0 5.0 Quality of life 25.0 6.9 19.4 17.1 33.3 16.7 Independence 12.5 0.0 0.0 0.0 0.0 0.8 Other 0.0 3.4 0.0 0.0 0.0 0.8 No data 0.0 0.0 5.6 0.0 0.0 1.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 N=180 Source: Authors’ calculations based on ECS micro-data. aUp to six years of schooling; bseven to nine years of schooling; cten to 12 years of schooling; dmore than 12 years of schooling. EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 71 ity of life has also been an important reason for moving abroad, and that may be another indirect reflection of poor labor-market insertion. International evidence and previous studies show that having relatives or friends living abroad facilitates the rapid entry of new emigrants into net- works, making settlement in a new country easier. In this study, we only know whether surviving women aged 12 and over have offspring living abroad. Finally, we turn our attention to remittances. The bulk of recent studies carried out for Mexico and Central America shows that remittances constitute an important income source for households in the country of origin. For Uruguay, however, this question has never been studied in detail because it has been assumed that remittance transfers were mini- mal. Indeed, recent estimates by the Uruguayan Central Bank reveal that in 2002 remittances amounted to around 0.5% of GDP, a rather low figure given that Uruguayan GDP was extremely depressed and ap- proximately 13% of the Uruguayan population was living abroad (Cabella and Pellegrino, 2004). Only 27.5% of recent emigrants cur- rently send remittances to help support to their former households. This may be because recent emigrants are not yet established enough to be sending money to their relatives. Different educational and age groups have different behaviors: less educated groups, which may con- tain older people, tend to send more remittances. Households with members who have emigrated may have developed a substitution strategy. According to the ECS data, 53% of the households that have seen their income reduced because of the loss of a member through emigration did not replace that income. Some 40% had been receiving economic help from a family member who later emigrated, and 3% had members who started to work to offset the income loss.6 The impact of remittances on household economic performance is an important subject, but more information is required to fully understand it. Even when remittance flows are limited, they could still have a signifi- cant impact on the receiving households if the recipients are primarily disadvantaged families, as this would help to overcome poverty. Household characteristics and recent emigration We needed to assess the main socioeconomic features of the households with members who emigrated between March and November 2002 in order to shed light on which socioeconomic sectors were most prone to emigrate. A probit model was estimated in order to obtain correlates for the probability of having emigrants in 2002 (Table 9).7 Variables included 6 The remaining 4% are non-responses. 7 See the second section for methodological details. 72 MIGRACIONES INTERNACIONALES Table 9. Probit estimates of the probability of having a member who emigrated between March-December 2002 (urban households) . Robust Marginal Standard Variable Coefficient Effect Error P>z Log number of household members (including emigrants) -0.8208 -0.0363 0.0195 0.000 Presence of children aged 0-18 0.2625 0.0108 0.0060 0.002 One person household -0.3243 -0.0105 0.0003 0.130 Childless couple 0.0414 0.0019 0.0270 0.737 Single-parent household 0.4199 0.0267 0.0177 0.001 Extended male-headed household 0.3691 0.0208 0.0232 0.000 Extended household 0.4543 0.0290 0.0160 0.000 Age 18-29 0.3205 0.0188 0.0200 0.006 Age 45-59 0.3956 0.0200 0.0165 0.000 Age 60 and over 0.5199 0.0313 0.0161 0.000 Gender of household head (female=1) -0.3489 -0.0134 0.0313 0.000 Years of schooling 0.0567 0.0025 0.0230 0.044 Years of schooling squared -0.0022 -0.0001 0.0134 0.112 Region 2 -0.1583 -0.0061 0.0209 0.199 Region 3 -0.4211 -0.0136 0.0120 0.000 Region 4 -0.2677 -0.0094 0.0133 0.046 Region 5 -0.0553 -0.0024 0.1250 0.462 Experienced economic emergency (yes=1)0.1092 0.0047 0.2296 0.109 Previous emigrants (yes=1) 1.3872 0.2105 0.0368 0.000 Wealth quintile 2 0.1291 0.0062 0.0181 0.218 Wealth quintile 3 0.1565 0.0077 0.0184 0.124 Wealth quintile 4 0.3097 0.0168 0.0200 0.003 Wealth quintile 5 0.2291 0.0118 0.0210 0.049 Head unemployed 0.2750 0.0155 0.0216 0.004 Head retired -0.2584 -0.0096 0.0209 0.010 Head other inactive 0.4592 0.0318 0.0289 0.000 Other city, same state -0.0917 -0.0039 0.0142 0.231 Other state 0.0001 0.0000 0.0139 0.998 Foreigner -0.8743 -0.0176 0.0343 0.004 Constant -1.9373 0.0195 0.000 Observations 2437 Wald statistic 589.46 Log likelihood -1000.4 Pseudo R2 0.1728 Source: Authors’ calculations based on ECS micro-data. Note: Region 2 comprises Artigas, Salto, and Rivera. Region 3 comprises Paysandú, Río Negro, Tacuarembó, Durazno, Treinta y Tres, and Cerro Largo. Region 4 comprises Soriano, Florida, Flores, Lavalleja, and Rocha. Region 5 comprises Colonia, San José, Canelones, and Maldonado. EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 73 in the model aimed to reflect the households’ demographic character- istics, human-capital endowment, and access to material resources, as well as the labor-market attachment of the head of the household and an approximation of members’ access to international networks. Demographic variables included in the equation were the logarithm of present household members plus the emigrants, the presence of children aged 0 to 18, household structure, region of residence, birthplace, and age of the head of household. Our results suggest that household size correlates negatively with the probability of having a member that emigrated between March and November 2002.8 Previous studies suggest that household size is asso- ciated with the probability of being poor, due to the presence of ex- tended households among the poor and to the higher fertility rates of low-skilled women (Vigorito, 2003). The presence of children is posi- tively associated with having recent emigrants, probably suggesting that this phenomenon occurs mostly in households in the early stages of the life cycle. Household structure was represented through a set of dummy vari- ables indicating one-person households, childless couples, couples with children, single-parent households, and extended households. Extended households were further separated out in order to isolate single-parent extended households. A binary variable reflected the gender of the head of the household. Previous studies have identified extended households as the most dis- advantaged family arrangement (Melgar and Vigorito, 2000), as this structure probably reflects income pooling to defray housing costs. In that interpretation, they are identified as having a higher probability of a member having recently emigrated. Single-parent households also positively correlate with emigration, but this finding may reflect that one member of the couple lives abroad. Meanwhile, female-headed households are less likely to have had a member emigrate, perhaps be- cause these households tend to comprise older adults, living alone. Life-cycle variables involved four dummy variables reflecting the head of the household’s age: 18 to 29; 30 to 44; 45 to 59; and 60 and over. The most significant effect was found in the 18 to 29 age group. This is in line with previous evidence from a broad range of countries and the data given above, as it shows that young people are the most likely to emigrate. 8 Estimates that consider the logarithm of the current number of household members provided almost the same results. Our sample does not contain one-person households or households that departed as a unit. Previous studies indicate that among young adults, one-person households are rare. Furthermore, it is probable that, with the period being so short, even when families as a whole were planning to emigrate, one member would go first to prepare for the arrival of the remaining household members. 74 MIGRACIONES INTERNACIONALES 9 We used the regionalization system of the Instituto Nacional de Estadística (National Statistics Institute). 10 We used Deon Filmer and Lant Pritchet’s (2000) method for creating a wealth in- dex. We chose a set of durables belonging to a household, and we weighted that using principal components methods. The probability of having a member who moved recently is not sta- tistically different for those households located in Montevideo com- pared to elsewhere in Uruguay, with the exception of regions 3 and 4 (which contain departments located in the center of the country).9 A set of dummy variables designed to show the head of the household’s birthplace, and evidence of internal migration, were also included in our multivariate analysis. We created a group of binary variables to re- flect the migratory status of the head of the household: always lived in the city where the interview took place; moved within the same depart- ment; moved within Uruguay to a different department; and, Finally, if he/she was born in a foreign country. The first possibility was the omit- ted variable. The results show that the probability of having recent emigrants is the same for all groups except when it comes to interna- tional immigrants. Household human-capital endowment was included in the equation through a second order polynomial for the household head’s years of schooling. Higher educational levels were positively correlated with the probability of having recent emigrants, which reaffirms the assertion above that emigrants are more skilled than the average Uruguayan. The fact that the second-order term of the polynomial was not significant shows that the marginal effects of an additional year of schooling on the probability of emigrating are linear. Another set of variables reflected access to economic resources includ- ing current income, variations in income, and an approximation to house- hold wealth. Current income is captured by the logarithm of present per capita household income. A set of dummy variables reflecting the eco- nomic crisis the household experienced during the 2002 crisis was in- cluded in the equation in order to assess whether changes in welfare rather than its absolute value, are related to international emigration. A wealth index was estimated in order to reflect household well-being in the long term. This index was constructed based on the presence in the household of a set of durable goods, and on that estimate, quintiles were computed, although the first quintile in the estimate was omitted.10 Household income did not have an effect on emigration independent from education. As education is a determinant of income, we kept years of schooling in the equation and removed per capita income. The re- cent economic crisis and the income shocks in 2002 do not have a noticeable impact on the probability for migration. This may indicate that the key factor is absolute lack of income rather than the degree to EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 75 which the income level has changed. Another factor is that income shocks occurred, albeit with different intensities, across all income levels.11 Thus, recent emigration might be considered not as a strategy against varia- tions in nominal income but as a strategy against decreasing real in- come. As to the wealth index, we found that households in the top 40% had a higher probability of emigrating. This is evidence that emi- gration is not a feasible strategy for the poorest households because resources are needed in order to travel and settle in the destination countries. Labor-market participation was reflected through the employment status of the household head.. Emigration was likely when the house- hold head was unemployed. It was rarer in retiree households, possibly because of life-cycle considerations and the 1990 pension reform, which provides those households with incomes that are often higher than those in households where the head participates in the labor force. To gauge the impact of access to international networks, we created a variable reflecting previous international emigration. This variable was built with the information gathered from surviving mothers. We created a dummy variable that took the value 1 if any woman in the household declared that she had offspring living abroad who had left Uruguay be- fore 2002, and zero otherwise. Of course, emigrants and household mem- bers could have other relatives living abroad not recorded in this survey. However, the variable proved to be significant and showed a strong im- pact on the probability of emigration: having relatives abroad increases by 20% the probability of emigrating during the crisis. Many studies on other countries that assess the effect on emigration trends of the presence of emigrant communities located abroad have reached similar conclusions. Authors hypothesize that the presence of relatives living in foreign countries has a demonstration effect, and it encourages emigration as long as it creates access to networks (see for example, Massey, 1998). Propensity to emigrate among current residents in Uruguay We examined the propensity to emigrate of the population in urban areas. Approximately 29% of the households interviewed declared that they have members who would like to emigrate, and within this group, almost 90% state that they would like to move outside of Uruguay. The potential destination countries are broadly the same as those that re- 11 We constructed the income-shock variable following a World Bank method (2003): If household members receiving income cited no income loss, no income shock was im- puted. If any household member experienced a reduction in income, income shock was negative, and if any member experienced an increase in income, it was positive. 76 MIGRACIONES INTERNACIONALES ceived the most emigrants in 2002: Brazil (3.6%), the United States (20.6%), Spain (47%), and Italy (6.55%). The reasons that were cited for wanting to leave are broadly the same as those stated for recent emigration (Table 10): low wages, unemployment, and to improve the quality of life account for almost 90% of the responses. Table 10. Reasons to emigrate cited by current residents in Uruguay, December 2002. Reason to emigrate % Low income 24.2 Unemployment 41.2 Study 3.9 Marriage 0.6 Family reasons 2.8 Violence 0.3 Improve quality of life 23.4 Independence 0.8 Other 1.9 No response 1.0 Total 100.0 Source: Authors’ calculations based on ECS micro-data. Finally, a probit model was estimated in order to identify which house- holds are more likely to emigrate, and to compare their profile with that of households where a member recently migrated (Table 11). Many variables that were significant when assessing the probability of having had recent emigrants in the household were not significant in this model, which may reflect that declaring a willingness to emigrate is more gen- eralized across socioeconomic groups than is effective departure. The poverty level of the household is positively associated with the propensity to move abroad (a notable difference from the findings for households with a member who has recently emigrated), and this vari- able shows a significant and separable effect. Therefore, we can con- clude that most emigrants do not come from poor households, because those in the lower-income strata do not have the necessary material resources to emigrate, particularly outside of the region. However, house- holds that experienced a negative income shock are more prone to move. The marginal effects suggest that when a household has had a mem- ber who has already emigrated, that significantly increases the prob- ability that the household will currently have members who are willing to leave Uruguay. The positive correlation for the variable “had emi- grants in 2002” may reflect a demonstration effect and household mem- bers will join their relatives abroad. EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 77 Table 11. Probit model on the propensity to emigrate, December 2002. Marginal Standard Variables effect error P>z Log number of household members (including migrants) 0.012 0.020 0.537 Years of schooling 0.011 0.006 0.064 Years of schooling squared 0.000 0.000 0.252 One-person household - 0 . 2 0 3 0.027 0.000 Childless couple - 0 . 1 9 9 0.018 0.000 Single parent household - 0 . 0 1 6 0.023 0.494 Extended male-headed household 0.060 0.016 0.000 Extended female-headed household - 0 . 0 2 6 0.020 0.195 Presence of children aged 0-18 - 0 . 0 8 7 0.016 0.000 Gender of household head (female=1) - 0 . 0 1 4 0.016 0.386 Had emigrants in 2002 (Yes=1) 0.352 0.031 0.000 Age 18-29 0.087 0.023 0.000 Age 45-59 - 0 . 0 1 7 0.013 0.216 Age 60 and over - 0 . 0 6 1 0.021 0.004 Region (Montevideo=0; rest=1) - 0 . 0 8 1 0.012 0.000 Poverty status (poor=1; non poor=0) 0.050 0.013 0.000 Negative income shock 0.131 0.125 0.000 Positive income shock 0.412 0.230 0.067 Previous emigrants (yes=1) 0.207 0.037 0.000 Wealth quintile 2 0.041 0.018 0.023 Wealth quintile 3 0.040 0.018 0.027 Wealth quintile 4 0.062 0.020 0.002 Wealth quintile 5 - 0 . 0 4 3 0.021 0.046 Head unemployed 0.074 0.022 0.000 Head retired - 0 . 0 3 9 0.021 0.068 Head other inactive - 0 . 0 9 5 0.029 0.003 Other city, same department 0.017 0.014 0.233 Other department 0.045 0.014 0.001 Foreigner 0.081 0.034 0.014 Observations 8 2 6 4 Wald chi2(29) 7 0 4 . 2 7 Prob > chi2 0 Pseudo R2 0 . 0 7 4 5 Source: Authors’ calculations based on ECS micro-data. Conclusion Having been a destination country for immigrants until the second half of the twentieth century, it is notable that Uruguay today is a country with net emigration. Previous studies suggest that since the 1960s, emigration can be considered a major response from the Uruguayan population to adverse political and economic circumstances (Filgueira, 78 MIGRACIONES INTERNACIONALES 1988; Teja and Wonsewer, 1982). Over the past four decades, migra- tion has been considerable, and net migration has been negative for many years. Population outflows increased significantly during economic crises and the political crisis of the 1970s. The magnitude of the 2002 population outflow is comparable to the migrations of the 1970s. As to the economic impact of emigration, many authors consider that remittances have a positive effect on a country, whereas the loss of hu- man capital is severely adverse. In Uruguay, today, emigration has be- come more generalized and widespread, and it now involves people from all educational levels. However, just as they were in earlier waves, highly skilled individuals are over-represented, and now the extent of that over-representation is greater than ever before. Thus, Uruguay’s emigration signifies a serious loss of human capital. According to ECS, a poor labor market (unemployment and low wages) is the primary motive for emigration. It constitutes an individual solu- tion, and its effects on the Uruguayan labor market have not been stud- ied. ECS database does not permit an assessment of whether emigration reduces unemployment or what its impact on inequality might be, so those are questions to be addressed in further research. Remittances are another significant aspect of emigration’s economic impact. According to the ECS, of all households in which a mother re- ports having at least one child living in another country, 22.7% receive remittances, and approximately 25% of recent emigrants send contri- butions to their former households. The total amount of remittances is low compared to macroeconomic aggregates (0.5% of GDP), particu- larly when we consider that GDP fell in 2002 and that there is some evidence from other countries that contributions from abroad can be counter-cyclical to the level of economic activity (Solimano, 2003). Nev- ertheless, the impact of remittances on poverty needs to be carefully studied because if these funds mainly reach poor households, they could play a role in alleviating poverty. Considering that most emigrants do not come from lower-strata households, this hypothesis must be tested. An accurate evaluation would require generating new data because ex- isting data sets are not suitable for answering this question. A significant proportion of the recent emigrants seem to have had access to networks of previous emigrants. Thus, links with Uruguayans living abroad seem to create opportunities that allow emigration to con- tinue and feed back into itself. Access to international networks, which allows for a rapid response to economic crisis, proved to be a key vari- able in explaining the probability of emigration. Almost one-third of the households interviewed reported having at least one member willing to emigrate. Although propensity to migrate must not be equated with future emigration, it is significant that will- EMIGRATION AND ECONOMIC CRISIS IN URUGUAY 79 ingness to leave Uruguay was positively correlated to higher levels of household poverty. Meanwhile, emigrants do not tend to come from lower-income strata households. 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Somoza, Jorge, A Proposal for the Use of Information on Residence of Sib- lings to Estimate Emigration by Age, International Union for the Scien- tific Study of Population (IUSSP), Papers No. 18, Liege, Belgium, 1981. Vigorito Andrea, The Evolution of Poverty in Uruguay in the 90s, Wash- ington, D.C., World Bank (Background Paper), 2003. Wonsewer, Israel, and Ana María Teja, La emigración uruguaya 1963- 1975, Montevideo, Centro de Investigaciones Económicas/Ediciones de la Banda Oriental, 1982. World Bank, Uruguay. Country Report, Washington, D.C., World Bank, 2003. Fecha de recepción: 31 de marzo de 2004 Fecha de aceptación: 8 de febrero de 2005