Can labor migration promote a measure of structural change in sending communities
by allowing workers to accumulate capital outside of their country of origin?
Using the historical experience of circular labor migration between Malawi
and the gold mines in South Africa, we investigate how oscillating flows of men and
inflows of money affect rural labor markets over the long run. We use a differencein-differences
design and newly digitized Census and administrative data to measure
what happens to labor market outcomes in the twenty years following two plausibly
exogenous shocks to the option to migrate. In places with high exposure to migration
shocks, workers shift out of agriculture and into more capital-intensive non-farm service
activities. We show that capital accumulated abroad is a key channel for these
structural changes.