© The Authors, 2021, Published by the Universidad del Zulia*Corresponding author: admarkos@gmail.com
Keywords:
Econometric model
Remittances
Expenditure on well-being
Transition of agricultural income sources in rural economies of Mexico
Transición de las fuentes de ingresos agropecuarios en economías rurales de México
Transição de fontes de renda agrícola nas economias rurais do México
1
Universidad Autónoma Chapingo-División de Ciencias
Económico Administrativas. Km. 38,5 Carretera México-
T
excoco, Chapingo, Estado de México, México. C.P. 56230.
Tel.: (0052) (595) 9521500.
2
Universidad Autónoma Chapingo-Unidad Regional
Universitaria de Zonas Áridas. Carretera Gómez Palacio-
Chihuahua km 40. C.P. 35230. Tel.: (0052) (872) 7760160.
Bermejillo, Durango, México.
Received: 30-10-2021
Accepted: 12-04-2022
Accepted: 31-05-2022
Abstract
Traditionally, agriculture has been the main economic activity of rural
communities, however, there are other sources of income that contribute
to expenditures on family well-being. Nevertheless, the dynamics of
these ows are unknown due to the absence of ofcial statistics for
small populations, which makes it difcult to analyze them in relation
to poverty. Through an econometric model, the objective was to analyze
the transition of income from agricultural production to sources in the
service sector and remittances. It was taken as a study case, "Eleodoro
Dávila" town from Filomeno Mata municipality, Veracruz, Mexico.
Randomly, a questionnaire was applied to 33.33% of the population and
an econometric model of expenditures on family well-being was built
with data obtained. The dependent variable was expenditures on family
well-being, while the independent variables were the diversity of sources
of income. In addition, the elasticities of the independent variables
were estimated from the econometric model. Primary and secondary
activities, subsidies and household transfers were found to contribute
to family well-being. In addition, it was found that a 1% increase in
income from livestock production generates a 0.05% change in spending
on family well-being, while agricultural production generates 0.16%.
Trade, international and national remittances generate the greatest effects
with 0.81%, 0.71% and 0.48% respectively. The situation that prevailed
during 2019-2020 in the study community allows us to conclude that the
agricultural sector has lost preponderance as the main source of income.
Andrés Aurelio López-Santiago
1
Juan Hernández-Ortiz
1
Ramón Valdivia-Alcalá
1
Marco Andrés López-Santiago
2*
Rev. Fac. Agron. (LUZ). 2022, 39(2): e223929
ISSN 2477-9407
DOI: https://doi.org/10.47280/RevFacAgron(LUZ).v39.n2.07
Socioeconomics
Associate editor: Dra. Fatima Urdaneta
University of Zulia, Faculty of Agronomy
Bolivarian Republic of Venezuela
This scientic publication in digital format is a continuation of the Printed Review: Legal Deposit pp 196802ZU42, ISSN 0378-7818.
Rev. Fac. Agron. (LUZ). 2022, 39(2): e223929. April - June. ISSN 2477-9407.
2-6 |
Resumen
Tradicionalmente, la agricultura ha sido la actividad económica
principal de las comunidades rurales, sin embargo, existen otras
fuentes de ingreso que aportan al gasto en bienestar familiar. Empero,
se desconocen las dinámicas de estos ujos debido a la ausencia de
estadísticas ociales para poblaciones pequeñas, lo cual diculta
su análisis en relación con la pobreza. El objetivo fue analizar la
transición de los ingresos provenientes de las unidades de producción
agropecuarias hacia las fuentes del sector servicios y remesas,
mediante un modelo econométrico. Se tomó como caso de estudio la
localidad rural “Eleodoro Dávila”, Filomeno Mata, Veracruz, México.
En forma aleatoria, se aplicó un cuestionario al 33,33% de la población
y con los datos obtenidos se construyó un modelo econométrico del
gasto en bienestar familiar. La variable dependiente fue el gasto en
bienestar familiar, mientras que las variables independientes fueron la
diversidad de fuentes de ingresos. Se estimaron las elasticidades de las
variables independientes. Se encontró que las actividades primarias y
secundarias, los subsidios y las transferencias hogares contribuyen
al bienestar familiar. Se halló que ante un incremento en 1% del
ingreso proveniente de la producción pecuaria, se genera un cambio
de 0,05% en el gasto en bienestar familiar, mientras que la producción
agrícola genera 0,16%. El comercio, las remesas internacionales y
nacionales generan los mayores efectos con 0,81%, 0,71% y 0,48%
respectivamente. La situación que prevaleció durante el 2019-2020 en
la comunidad de estudio permite concluir que el sector agropecuario
ha perdido preponderancia como fuente principal de ingresos.
Palabras clave: Modelo econométrico, remesas, gasto en bienestar.
Resumo
Tradicionalmente, a agricultura tem sido a principal atividade
econômica das comunidades rurais, no entanto, existem outras fontes
de renda que contribuem para os gastos com o bem-estar familiar. No
entanto, a dinâmica desses uxos é desconhecida devido à ausência
de estatísticas ociais para pequenas populações, o que diculta sua
análise em relação à pobreza. O objetivo foi analisar a transição da
renda das unidades de produção agropecuária para fontes no setor de
serviços e remessas, por meio de um modelo econométrico. Tomando
como estudo de caso a localidade rural “Eleodoro Dávila” município
de Filomeno Mata, Veracruz, México. Aleatoriamente, foi aplicado
um questionário a 33,33% da população e com os dados obtidos
foi construído um modelo econométrico de gastos com bem-estar
familiar. A variável dependente foi o gasto com o bem-estar familiar,
enquanto as variáveis independentes foram a diversidade de fontes de
renda. As elasticidades das variáveis independentes foram estimadas.
As atividades primárias e secundárias, os subsídios e as transferências
familiares contribuem para o bem-estar da família. Constatou-se
que um aumento de 1% na renda da produção pecuária gera uma
variação de 0,05% nos gastos com o bem-estar familiar, enquanto
a produção agrícola gera 0,16%. Comércio, remessas internacionais
e nacionais geram os maiores efeitos com 0,81%, 0,71% e 0,48%
respectivamente. A situação que prevaleceu durante 2019-2020 na
comunidade em estudo permite-nos concluir que o setor agrícola
perdeu preponderância como principal fonte de rendimento.
Palavras-chave: Modelo econométrico, remessas, gastos com bem-
estar.
Introduction
The concept of poverty is conceived as a condition in which
the population is far from reaching a standard, social norm or state
of optimal situation for its good development (ECLAC, 2018).
Considering that the ability of a person to possess the elements of
well-being does not only depend on whether they are free or have
permission to acquire what they need, since a fundamental part is
having the economic capacity to acquire them (Stezano, 2021).
As Sison (1995) indicates, economists associate well-being with
per capita income, the level or quality of life of the inhabitants of a
region.
In a general way, and despite the multidimensional and complex
nature that it may have, it is said that poverty is a condition in which
one or more people have a level of well-being below the minimum
necessary for survival (Berneche, 2010, p. 31)
Considering the above, Camelo (2001) indicates that “household
income and spending are central elements for the evaluation and
study of the living conditions of families” (p. 5). In order to evaluated
it, several methodologies are used, one of them is the Poverty Line
(LP) proposed by the National Council for the Evaluation of Social
Development Policy (CONEVAL). It is an approach that classies a
household as poor if its income or expenditure is less than the value
of an LP. The latter represents the added value of all the goods and
services considered essential to satisfy basic needs (a food basket and
a non-food basket) (CONEVAL, 2019).
In this sense and taking into account that the food and non-food
basket are considered essential for the good development of a person,
it is concluded that this is nothing more than an expense in well-being
and the poverty line is the possibility of be able to afford that expense.
In this way, Mora and Cerón (2015) point out that the expenditure
made on the welfare of rural households comes from a total family
income, and this in turn depends on various sources, either from
productive units or from national remittances and international, trade,
government programs, among others. So, knowing the diversity of
sources of income for spending on welfare, it is possible to generate
public policy proposals that can help improve the conditions of
certain populations that require it.
In the same context, Gurusamy et al. (2018) indicate that “the
importance of the study of the social well-being of households lies in
the fact that the results can be used to propose specic intervention
strategies, taking into account productive, socioeconomic and
environmental characteristics” (p. 215).
However, the information on income and expenditure, which is
exposed by the National Survey of Household Income and Expenses
(ENIGH) of Mexico, is only displayed for populations greater
than 2,500 inhabitants, leaving aside rural localities, which are
characterized by being populations smaller than that. In this way, the
lack of information at the local level of rural economies results in the
difculty of recognizing the sources of income destined for spending
on family welfare, which represents a problem for the analysis of
these economies.
In this context, Mora and Cerón (2015) analyzed factors that
inuence the diversication of activities, using data from the National
Survey of Rural Households of Mexico (ENHRUM) of 2008, and in
turn, determine the impact of this on the income of rural households
in Mexico. They reveal that diversication of activities is the key for
increasing income in rural households, which leads to the conclusion
that public policies must be better focused, taking as a priority
families with lower incomes.
n =
N ∗ Z
a
2
∗ p ∗ q
d
2
∗
(
N − 1
)
+ Z
a
2
∗ p ∗ q
1
This scientic publication in digital format is a continuation of the Printed Review: Legal Deposit pp 196802ZU42, ISSN 0378-7818.
López-Santiago et al. Rev. Fac. Agron. (LUZ). 2022, 39(2): e2239293-6 |
Likewise, Gijón et al. (2015), tested a general model of family
economies for rural communities, evaluating the main sources
of income that contribute to family well-being, they veried that
“government transfers constitute one more source of income, and
can even reach represent, along with transfers from other households,
restrictions on family welfare” (p. 1).
In Oaxaca, Mexico, Méndez and Reyes (2016) analyzed family
well-being, proposed a theoretical model of well-being with 27
independent variables, and identied the variables that favor or
restrict well-being. They conclude that income, occupation, housing
quality and government support are variables that explain well-being.
Similarly, Reyes et al. (2015), propose a model for the rural
households economies in Mexico, where family well-being and
household income are related. They also indicate that international
remittances are part of total income, in addition to government
transfers and self-consumption production. They mention that
international remittances (although in other cases regional wages)
could be the catalyst to raise family well-being in relation to the level
that the local labor market allows.
Therefore, this research aimed to develop a model of “Family
Welfare Expenditure” to analyze the transition from agricultural
sources of income to non-agricultural sources (services and
remittances). It is important to highlight that the case study is a locality
with an approximate population of 1440 inhabitants. It belongs to the
municipality of Filomeno Mata, Veracruz. A rural population that
occupied the third position of state poverty by 2015, with 91.6% of
its population in that condition.
Materials and methods
Study area
The study was carried out in the locality “Eleodoro Dávila”, one
of the eleven localities that make up the municipality of Filomeno
Mata in the state of Veracruz de Ignacio de la Llave; Mexico is located
between parallels 20° 10’ and 20° 16’ north latitude; the meridians
97° 38’ and 97° 45’ of west longitude; altitude between 194 and 800
meters above sea level (SEFIPLAN, 2018).
Population
In order to know the exact number of family nuclei, the director of
the municipality’s health center was consulted, who indicated that the
municipality has 2,322 family nuclei and the town “Eleodoro Dávila”
has 240.
Interviews and sample size
To obtain the data, a semi-structured questionnaire was prepared
with 78 questions distributed in 6 sections; “The household”,
“Services”, “Economic activities”, “Other income and savings”,
“Household expenses”, “Subsidies” and “Migration”. To calculate
the sample size, the formula proposed in Spiegel and Stephens (2009)
was considered:
where:
N: Population = 240, Z: Condence level = 1.96, P: Expected
proportion = 0.5, Q: Probability of failure = 0.5, and D: Precision =
0.09
Substituting the values gives 79.58 as a result, so a total of 80
interviews were carried out in the locality.
Model definition
It was used the methodology proposed by Reyes et al., (2015),
which is based on the family income equation:
where:
IF = Family income, C = Consumption, Inv = Investment and
Ah = Savings
In addition, C contains the current expenses: Food, health, clothing
and footwear, education, housing. Therefore, C approximates Family
Welfare Expenditure:
On the other hand, family income derives from various sources of
the labor market, it were considered: local income (IngLoc), national
remittances (RemNa), international remittances (RemInt), income
from subsidies (ProG), income by livestock production (IngPP),
income in agricultural production (IngPA), income from trade (IngC)
and other income (IngOtr)
Substituting the above, the following equation is obtained:
For the investment variable, the following accounts were
considered: Expenses in livestock production, agriculture and trade
(transport and purchase of merchandise or supplies). Savings were
calculated by subtracting total current spending from total income.
Interviews results were processed in an Excel spreadsheet and
for the model generation was used the software Gnu Regression,
Econometrics and Time-series Library (Gretl).
Welfare Spending Elasticities
Elasticity is dened, according to Varian (2010), as the measure
of the “sensitivity” of demand to price or income variables. That is,
elasticity is used to measure the sensitivity of the dependent variable
to a change in the value of one of the independent variables, when the
value taken by the rest of the independent variables is kept constant.
In this case, the sensitivity of the variable “Expenditure on
Well-being” was measured in the face of changes in the variables of
income, savings and investment.
Such elasticity was calculated as follows:
where:
ε = Elasticity
dy/dx = Coefcient of the model (of each variable)
(Ing) ̃ = Average of each income variable
(GB) ̃ = Average of the variable “Expenditure on Wellbeing”
Results and discussion
Socioeconomic characteristics
Family nuclei are made up of an average of 5 members, where
88.7% of family heads are men, 70% of all family heads only have a
basic level of education (primary and secondary).
During the study period, 56.2% of the heads of families lived
outside the locality; of this migrant population, 70% worked and lived
in Mexico City and 20% in the United States of America.
According to the eld data collected, the most used job with
39.5% of the economically active population, is the masonry trade
and the second most popular job is related to the work of agricultural
production with 18, 6%.
n =
N ∗ Z
a
2
∗ p ∗ q
d
2
∗
(
N − 1
)
+ Z
a
2
∗ p ∗ q
1
= + + ℎ
1
=
∗
�
�
1
=
1
+
2
+
3
+
4
1
+
5
+
6
+
7
+
8
1
−
9
1
−
10
ℎ
1
C≅GBF
1
This scientic publication in digital format is a continuation of the Printed Review: Legal Deposit pp 196802ZU42, ISSN 0378-7818.
Rev. Fac. Agron. (LUZ). 2022, 39(2): e223929. April - June. ISSN 2477-9407.
4-6 |
28.7% of the total family units own farmland, with an average
extension of 1.8 hectares. 86.9% of the total agricultural producers
declared that their main product is corn and only 8.6% use the
land for coffee harvesting. Despite the fact that one of the little
recognized production activities in the region is livestock, in the
locality 53.7% of the interviewed families own backyard cattle,
while 22.5% of households own a local business.
Econometric model to determine spending on family welfare
The family welfare spending model was estimated using
ordinary least squares. All parameters were signicant; that is, all
variables inuenced the model. The coefcients are presented in
table 1.
Table 1. Model of family economies.
Coecient
Standard
deviation
t statistic p value
Constant 419.373 1016.08 0.4127 0,6811
IngLoc 0.848070 0.173586 4.886 <0.0001 ***
RemNa 0.836116 0.129117 6.476 <0.0001 ***
RemInt 0.773989 0.0546399 14.17 <0.0001 ***
ProG 0.996636 0.403600 2.469 0.0160 **
IngPP 0.952900 0.361818 2.634 0.0104 **
IngPA 0.871758 0.162730 5.357 <0.0001 ***
IngC 0.880391 0.107711 8.174 <0.0001 ***
IngOtr 0.885057 0.221726 3.992 0.0002 ***
Saving −0.852593 0.0546405 −15.60 <0.0001 ***
Investment −0.878308 0.108567 −8.090 <0.0001 ***
Dependent
variable
mean
6144.072 Dependent variable SD 7730.358
Sum of
squares
residual
9.01e+08 Regression SD 3613.933
R-squared
0.809110 R-squared corrected 0.781445
F(10, 69)
29.24649 P value (F) 5.28e-21
Log-
likelihood
−763.0024 Akaike Criterion 1548.005
Schwarz
Criterion
1574.207
Hannan-Quinn Criterion 1558.510
IngLoc: local income; RemNa: national remittances; RemInt: international
remittances; ProG: income from subsidies; IngPP: income by livestock
production; IngPA: income in agricultural production; IngC: income from trade;
IngOtr: other income.
According to the r squared, the model has a goodness of t of
80% and all the variables turn out to be signicant. The estimated
equation is effective to the econometric tests; that is, the t statistic
is signicant at a level of 0.01 in 8 of the variables, except for ProG
and IngPP, which are signicant at a level of 0.05. Therefore, this
model predicts that each of the independent variables establish
linear relationships with spending on family welfare.
In relation to the evaluation of assumptions with the formal
tests, the following was obtained:
The model has an automatic heteroskedasticity correction, so
the estimation of the parameters guarantees constant variance and
therefore the condence intervals for the estimated coefcients are
correctly calculated.
Due to the nature of the data (cross section), the assumption
of no autocorrelation is not considered, the errors are independent
since each observation is a family nucleus.
According to the variance ination factors (VIF), 8 of the
variables have values less than 4, and since the collinearity problem
could occur in values greater than 10, it means that these explanatory
variables are independent and are not found strongly correlated,
except for the variables IngC and INVERSION. In the rst test,
these last two variables would indicate the presence of a collinearity
problem. However, according to the BKW table (by the initials of
the test authors), none of the variables has a “strong” almost linear
dependence. Then none of the parameter estimates are problematic.
Regarding the normality test, the null hypothesis is rejected,
the residuals do not meet the assumption of following a normal
distribution. However, despite the assumption not being fullled,
the estimators are the Best Linearly Unbiased Estimators and the
hypothesis tests on the parameters are correct.
All mentioned previously, indicates that the model is statistically
reliable, expressed as follows:
This equation reveals that the welfare spending of families in
this locality depends on a diverse portfolio of income sources. An
increase in each of the income variables generates an increase in
welfare spending, unlike the Savings and Investment variables that
generate a negative effect. In the case of savings, for each peso
allocated to this item, spending on welfare decreases by 0.8535
cents. The investment variable is found in the same case, for each
peso invested, welfare spending decreases by 0.8783081 cents. The
negative proportions correspond to the expected signs in the model
denition.
In accordance with the above, it follows
that the main sources
of household liquidity are: subsidies, income from livestock
production, trade, transfers between households, agricultural
production, local income and remittances.
Elasticity of spending on welfare with respect to income
variables
When measuring the sensitivity of change in welfare spending,
with respect to the income variables, all of them turn out to be
inelastic, that is, the results are less than 1. The elasticities are of
great relevance, since they help to conrm the sectors or sources of
income that generates increases in welfare spending.
Table 2 shows the changes caused by each of the income
sources in welfare spending. Thus, it can be seen that trade is the
one that generates the greatest sensitivity, since, in the face of an
increase in one percentage unit in this income, a change of 0.81%
in spending is generated.
The economy of families in the locality has a strong link
with the international economy, because in the face of a change
in an increase of one percentage unit in income from international
remittances, this leads to a change in spending of 0.71%.
According to the elasticities, the changes caused by agricultural
and livestock production are relatively low, being 0.16% and 0.05%,
respectively. In other words, the contribution of the agricultural
sector in changes in welfare spending is lower than the contributions
made by the services or remittances sector.
= 419.373 + 0.84807 + 0.836116 + 0.773989
1
+0.996636 + 0.9529 + 0.871758 + 0.880391
1
+0.885057 − 0.878308 − 0.852593ℎ
1
This scientic publication in digital format is a continuation of the Printed Review: Legal Deposit pp 196802ZU42, ISSN 0378-7818.
López-Santiago et al. Rev. Fac. Agron. (LUZ). 2022, 39(2): e2239295-6 |
These results agree to a certain extent with those exposed by
Reyes et al., (2015) and Gijó (2015), who report that the main source
of income is national and international remittances, in their study
locations.
Table 2 Elasticities of welfare spending.
Variables Parameters Variables Elasticities
Local income 0.84807 1765.75 0.24
National remittances 0.836116 3520 0.48
International remittances 0.773989 5675 0.71
Subsidy income 0.996636 1062.5 0.17
Income from livestock
production
0.9529 351.6875 0.05
Income from
agricultural production
0.871758 1095.92708 0.16
Trading income 0.880391 5619.6 0.81
Other income 0.885057 461.25 0.07
Savings -0.852593 6751.90208 -0.94
Investment -0.878308 5757.4125 -0.82
In addition, Blanco and Bardomás (2015), note that since year
2000, the heads of rural households in Mexico were employed in a
greater proportion, outside the family agricultural production units.
They mention that this trend continues and is even accentuated, as
households with different sources of employment grow. As a reference
to this, in this study, 56.2% of the heads of households worked and
lived outside the locality at the time of collecting the information.
In the same way, Méndez-Barrón (2016) indicates that “in general
there is a reduction in the role of agricultural activities, rather than
a reduction, a recomposition of the rural productive structure is
observed, where commercial and service activities are strengthened
to the detriment of the primaries” (p. 431). Likewise, Salgado-Nieto
(2019) points out that remittances, non-agricultural and agricultural
wages have become the main sources of income for rural households.
In this regard, Martínez-Domínguez et al., (2018) assert that
“in the Mexican countryside, a transition of the workforce from the
agricultural to the non-agricultural sector is taking place, since the
former stopped generating sufcient income to support the families”
(p. 22).
In short, in relation to the studies carried out in other locations
in Mexico, mentioned above, and the conclusions reached by
the researchers; the results of the locality studied do not show a
discrepancy in the transition of income sources.
Also, one of the reasons for these results could be the low
endowments of land for agricultural use, so alternatives are needed
for this situation faced by households. As mentioned by Gurusamy
et al. (2018), one of the options is “to encourage non-agricultural
activities, mainly small businesses and trades” (p. 232).
Conclusions
With a 80% goodness of t, the proposed model allows us to
analyze the sources of income that contribute to family well-being.
According to this model, it can be recognized that primary and
secondary activities, as well as government subsidies and transfers
between households, contribute to family income and therefore to
family well-being.
It is necessary to mention that each of the sources of income
generates changes in family well-being in different proportions. In this
sense, the income derived from livestock production only produces a
change of 0.05% in welfare spending; while agricultural production
generates 0.16%. Therefore, these effects are lower in relation to
the changes created by other income, such as trade that generates
a change of 0.81%, international remittances 0.71% and national
remittances 0.48%. In other words, changes in income, derived
from agricultural and livestock production, generate relatively small
changes in spending on family welfare.
The situation that prevailed in the locality studied during the 2019-
2020 period, describes a rural community that is moving towards a
recomposition of the rural productive structure, in which the service
activity supported by remittances is being strengthened.
In this way, it is necessary to deliberate about the public policies
that are implemented in rural localities. Proposals are needed
to reactivate the agricultural sector, especially in small peasant
production units that allow for an impact on food security, as well
as on territorial development. In the same context, it is necessary to
encourage the productive investment of international remittances,
and where appropriate, reduce dependence on this source of income,
which has been a palliative but has not meant an improvement in the
poverty conditions of the rural locality.
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