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Seasonal migration and risk aversion

Bryan, Gharad, Chowdhury, Shyamal and Mushfiq Mobarak, Ahmed (2012) Seasonal migration and risk aversion. CEPR Discussion Paper. Centre for Economic Policy Research, London, UK.

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Abstract

Pre-harvest lean seasons are widespread in the agrarian areas of Asia and Sub-Saharan Africa. Every year, these seasonal famines force millions of people to succumb to poverty and hunger. We randomly assign an $8.50 incentive to households in Bangladesh to out-migrate during the lean season, and document a set of striking facts. The incentive induces 22% of households to send a seasonal migrant, consumption at the origin increases by 30% (550-700 calories per person per day) for the family members of induced migrants, and follow-up data show that treated households continue to re-migrate at a higher rate after the incentive is removed. The migration rate is 10 percentage points higher in treatment areas a year later, and three years later it is still 8 percentage points higher. These facts can be explained by a model with three key elements: (a) experimenting with the new activity is risky, given uncertain prospects at the destination, (b) overcoming the risk requires individual-specific learning (e.g. resolving the uncertainty about matching to an employer), and (c) some migrants are close to subsistence and the risk of failure is very costly. We test a model with these features by examining heterogeneity in take-up and re-migration, and by conducting a new experiment with a migration insurance treatment. We document several pieces of evidence consistent with the model.

Item Type: Monograph (Working Paper)
Official URL: http://www.cepr.org/
Additional Information: © 2012 The Authors
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
JEL classification: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J61 - Geographic Labor Mobility; Immigrant Workers
O - Economic Development, Technological Change, and Growth > O1 - Economic Development
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources; Human Development; Income Distribution; Migration
R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R23 - Regional Migration; Regional Labor Markets; Population
Sets: Departments > Economics
Collections > Economists Online
Date Deposited: 11 Nov 2013 14:18
Last Modified: 29 Jun 2019 23:25
URI: http://eprints.lse.ac.uk/id/eprint/46778

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