EconPapers    
Economics at your fingertips  
 

Networks and Misallocation: Insurance, Migration, and the Rural-Urban Wage Gap

Kaivan Munshi and Mark Rosenzweig

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We provide an explanation for the large spatial wage disparities and low male migration in India based on the trade-off between consumption-smoothing, provided bycaste-based rural insurance networks, and the income-gains from migration. Our theory generates two key empirically-verified predictions: (i) males in relatively wealthy households within a caste who benefit less from the redistributive (surplus-maximizing)network will be more likely to migrate, and (ii) males in households facing greater rural income-risk (who benefit more from the insurance network) migrate less. Structural estimates show that small improvements in formal insurance decrease the spatial misallocation of labor by substantially increasing migration.

Date: 2015-10-05
New Economics Papers: this item is included in nep-ias, nep-mig and nep-ure
Note: km619
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.econ.cam.ac.uk/sites/default/files/pub ... pe-pdfs/cwpe1562.pdf

Related works:
Journal Article: Networks and Misallocation: Insurance, Migration, and the Rural-Urban Wage Gap (2016) Downloads
Working Paper: Networks and Misallocation: Insurance, Migration, and the Rural-Urban Wage Gap (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1562

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().

 
Page updated 2025-03-22
Handle: RePEc:cam:camdae:1562