The effect of remittances on capital accumulation remains a contested topic. This paper uses a
panel data set from rural Mexico to investigate the impact of remittances on agriculture and
livestock investments. After controlling for the endogeneity of migration through an instrumental
variable estimation our empirical results show that international migration has a significantly
positive effect on the accumulated agricultural assets but not on livestock capital. This suggests
that households use the capital obtained from international migration only to overcome liquidity
constraints for subsistence production whereas migration itself seems to be the superior
investment option compared to other productive activities such as livestock husbandry.