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Migration and Informal Insurance

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Do new migration opportunities for rural households change the nature and extent of informal risk sharing" We experimentally document that randomly offering poor rural households subsidies to migrate leads to a 40% improvement in risk sharing in their villages. Our model of endogenous migration and risk sharing shows that risky and temporary migration opportunities can induce an improvement in risk sharing enabling pro"table migration. Accounting for improved risk sharing, the migration experiment increased welfare by 12.9%. However, permanent declines in migration costs improve outside options for households and can lead to reductions in risk sharing. The short-run experimental results for migration subsidies can differ from the longer-run impacts of a policy that permanently subsidizes migration.

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  • Costas Meghir & Ahmed Mushfiq Mobarak & Ahmed Corina Mommaerts & Ahmed Melanie Morten, 2019. "Migration and Informal Insurance," Cowles Foundation Discussion Papers 2185R, Cowles Foundation for Research in Economics, Yale University, revised Aug 2020.
    • Handle: RePEc:cwl:cwldpp:2185r
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    Cited by:

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    2. Lagakos, David & Marshall, Samuel & Mobarak, Ahmed Mushfiq & Vernot, Corey & Waugh, Michael E., 2020. "Migration costs and observational returns to migration in the developing world," Journal of Monetary Economics, Elsevier, vol. 113(C), pages 138-154.
    3. Jules Gazeaud & Eric Mvukiyehe & Olivier Sterck, 2023. "Cash Transfers and Migration: Theory and Evidence from a Randomized Controlled Trial," The Review of Economics and Statistics, MIT Press, vol. 105(1), pages 143-157, January.
    4. Mazur, Karol, 2023. "Sharing risk to avoid tragedy: Informal insurance and irrigation in village economies," Journal of Development Economics, Elsevier, vol. 161(C).
    5. Tessa Bold & Tobias Broer, 2021. "Risk Sharing in Village Economies Revisited [Efficient Risk Sharing with Limited Commitment and Storage]," Journal of the European Economic Association, European Economic Association, vol. 19(6), pages 3207-3248.
    6. Selod, Harris & Shilpi, Forhad, 2021. "Rural-urban migration in developing countries: Lessons from the literature," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    7. Cirillo, Marinella & Cattaneo, Andrea & Miller, Meghan & Sadiddin, Ahmad, 2022. "Establishing the link between internal and international migration: Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 157(C).
    8. Bastian, Jacob E. & Black, Dan A., 2024. "Relaxing financial constraints with tax credits and migrating out of rural and distressed America," Journal of Public Economics, Elsevier, vol. 234(C).
    9. Alejandro Sanchez-Becerra, 2022. "The Network Propensity Score: Spillovers, Homophily, and Selection into Treatment," Papers 2209.14391, arXiv.org.
    10. Urfels, Anton & Mausch, Kai & Harris, Dave & McDonald, Andrew J. & Kishore, Avinash & Balwinder-Singh, & van Halsema, Gerardo & Struik, Paul C. & Craufurd, Peter & Foster, Timothy & Singh, Vartika & K, 2023. "Farm size limits agriculture's poverty reduction potential in Eastern India even with irrigation-led intensification," Agricultural Systems, Elsevier, vol. 207(C).
    11. Marta Schoch, 2020. "Essays on political economy, inequality and development," Economics PhD Theses 0120, Department of Economics, University of Sussex Business School.
    12. Karol Mazur, 2020. "Sharing Risk to Avoid Tragedy: Informal Insurance and Irrigation in Village Economies," CSAE Working Paper Series 2020-19, Centre for the Study of African Economies, University of Oxford.

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    More about this item

    Keywords

    Informal Insurance; Migration; Bangladesh; RCT;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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