Working Paper: NBER ID: w26082
Authors: Costas Meghir; Ahmed Mushfiq Mobarak; Corina D. 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.
Keywords: migration; risk sharing; randomized controlled trial; welfare effects
JEL Codes: D12; D52; J6; O12; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| migration subsidies + underlying risk environment (F22) | positive or negative spillovers (F69) |
| permanent decline in migration costs (F16) | reduction in risk sharing (D81) |
| migration subsidies (F22) | risk sharing (D16) |
| migration subsidies (F22) | actual transfers between households (D15) |
| migration subsidies (F22) | likelihood of receiving help from family and friends (I38) |
| migration subsidies (F22) | reduction of the effect of household income on consumption (D12) |
| migration subsidies (F22) | increase in welfare (I38) |