CFDP Update Date
December 22, 2020
Journal of Economic Literature (JEL) Code(s)
D12, D91, D52, O12, R23
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.
Meghir, Costas; Mobarak, Ahmed Mushfiq; Mommaerts, Corina; and Morten, Melanie, "Migration and Informal Insurance" (2019). Cowles Foundation Discussion Papers. 2588.