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Agricultural Distortions Braulio Britos, Manuel A. Hernandez, and Danilo Trupkin WP/25/233 IMF Working Papersdescribe research inprogress by the author(s) and are published to elicit comments and to encourage debate.The views expressed in IMF Working Papers are AgriculturalDistortions andInternationalMigrationPrepared byBraulio Britos, Manuel A. Hernandez,andDanilo Trupkin* Authorized for distribution by Emine Boz IMF Working Papersdescribe research in progress by the author(s) and are published to elicitcomments and to encourage debate.The views expressed in IMF Working Papers are those of the ABSTRACT:International migration is a recurrent phenomenon that has grown rapidly over the past twodecades. This paper examines the role of agricultural distortions in shaping emigration patterns and influencingproductivity and welfare in developing countries, using Guatemala as a case study. We develop a theoreticalframework where household members can work in agriculture, non-agriculture, or emigrate, and calibrate themodel combining detailed micro and aggregate data. Our model identifies two key channels through whichagricultural distortions affect migration and productivity: a first channel where distortions increase emigration RECOMMENDED CITATION:Britos, Braulio, Hernandez, M. A, Trupkin, D. (2025). Agricultural Distortions andInternational Migration. IMF Working Paper No.25/233 *We thank the valuable comments of Tasso Adamopoulos, Lian Allub, Guillermo Alves,Emine Boz,Julieta Caunedo,EvangelinaDardati,Dolores de la Mata, Javier Garcia-Cicco, Juan Odriozola, Diego Restuccia, and MarianoTommasi, andseminarparticipants at RIDGE Forum, CAF, Universidad de San Andres, and IMF. Britos:International Monetary Fund,bbritos@imf.org;Hernandez: International Food Policy Research Institute,m.a.hernandez@cgiar.org;Trupkin: Universidad de San Andres, dtrupkin@udesa.edu.ar;This work wassupported by the donors who fund the CGIAR’s Science Programs on Food Frontiers andSecurity andScaling for Impact through their contributions to the CGIAR Trust Fund. We also gratefully acknowledgesupport from Contents 1Introduction 2Theoretical framework 2.1Agricultural sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2Non-agricultural sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3The household’s domestic problem. . . . . . . . . . . . . . . . . . . . . . .2.4The migration problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Model estimation 3.1Regional division of Guatemala . . . . . . . . . . . . . . . . . . . . . . . . .3.2Externally calibrated parameters. . . . . . . . . . . . . . . . . . . . . . . .3.3Productivity and distortions . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Quantitative analysis 4.1Counterfactual scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . .304.2Counterfactual estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344.2.1Overall changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 5Concluding remarks AProofs of the migration and productivity channels A.1Migration channel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A.2Productivity channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BModel extension with agricultural labor and rural-rural migration B.1Agricultural sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58B.2Non-agricultural sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 CData and calibration C.1Employment and migration shares. . . . . . . . . . . . . . . . . . . . . . .64C.2Agricultural production and income data. . . . . . . . . . . . . . . . . . .65 DSupplementary Tables and Figures 1Introduction International migration is a recurrent phenomenon that has grown rapidly over the past twodecades and at a faster pace than total population growth. According to the International Organization for Migration (IOM), there were 281 million international migrants in 2020(3.6% of the world population), compared to 173 million in 2000 (2.8% of the population).1People generally emigrate from vulnerable areas in developing countries due to economic motives as well as extreme weather events and conflict (violence) such that migration can This paper formally examines the role of agricultural distortions on explaining emi-gration patterns in developing countries and their effects on local aggregate productivityand welfare, using the case of Guatemala as an example. Agricultural distortions can arisefrom the existence of inefficient regulations and interventions, information asymmetries infavor of insiders, transaction costs, among other factors. Guatemala offers an interesting Emigration, in turn, is recurrent and increasing, which situates the country among the top-15 recipient countries of international remittances (IOM, 2022), despite its relativelysmall population size.4It is estimated that net out-