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Migration and Informal Insurance: Evidence from a Randomized Controlled Trial and a Structural Model

Author

Listed:
  • Costas Meghir
  • A Mushfiq Mobarak
  • Corina Mommaerts
  • Melanie Morten

Abstract

We document that an experimental intervention offering transport subsidies for poor rural households to migrate seasonally in Bangladesh improved risk sharing. A theoretical model of endogenous migration and risk sharing shows that the effect of subsidizing migration depends on the underlying economic environment. If migration is risky, a temporary subsidy can induce an improvement in risk sharing and enable profitable migration. We estimate the model and find that the migration experiment increased welfare by 12.9%. Counterfactual analysis suggests that a permanent, rather than temporary, decline in migration costs in the same environment would result in a reduction in risk sharing.

Suggested Citation

  • Costas Meghir & A Mushfiq Mobarak & Corina Mommaerts & Melanie Morten, 2022. "Migration and Informal Insurance: Evidence from a Randomized Controlled Trial and a Structural Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(1), pages 452-480.
    • Handle: RePEc:oup:restud:v:89:y:2022:i:1:p:452-480.
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    File URL: http://hdl.handle.net/10.1093/restud/rdab021
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    Citations

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    Cited by:

    1. Rana, Sohel & Qaim, Matin, 2023. "Why do rural people temporarily migrate to other rural areas? Insights from northern Bangladesh," Discussion Papers 335388, University of Bonn, Center for Development Research (ZEF).
    2. Somville, Vincent & Vandewalle, Lore, 2023. "Access to banking, savings and consumption smoothing in rural India," Journal of Public Economics, Elsevier, vol. 223(C).
    3. Chowdhury, Shyamal & Hasan, Syed & Sharma, Uttam, 2024. "The Role of Trainee Selection in the Effectiveness of Vocational Training: Evidence from a Randomized Controlled Trial in Nepal," IZA Discussion Papers 16705, Institute of Labor Economics (IZA).
    4. Harold L Cole & Dirk Krueger & George J Mailath & Yena Park, 2024. "Trust in Risk Sharing: A Double-Edged Sword," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(3), pages 1448-1497.
    5. Pietrobon, Davide, 2024. "The dual role of insurance in input use: Mitigating risk versus curtailing incentives," Journal of Development Economics, Elsevier, vol. 166(C).
    6. David Lagakos & Ahmed Mushfiq Mobarak & Michael E. Waugh, 2023. "The Welfare Effects of Encouraging Rural–Urban Migration," Econometrica, Econometric Society, vol. 91(3), pages 803-837, May.
    7. Bocquier, Philippe & Cha’Ngom, Narcisse & Docquier, Frédéric & Machado, Joël, 2023. "The Within-Country Distribution of Brain Drain and Brain Gain Effects: A Case Study on Senegal," IZA Discussion Papers 16497, Institute of Labor Economics (IZA).

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