The Welfare Effects of Encouraging Rural-Urban Migration

David Lagakos, Ahmed Mobarak and Michael Waugh

No 635, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: This paper studies the welfare effects of encouraging rural-urban migration in the developing world. To do so, we build and analyze a dynamic general-equilibrium model of migration that features a rich set of migration motives. We estimate the model to replicate the results of a field experiment that subsidized seasonal migration in rural Bangladesh, leading to significant increases in migration and consumption. We show that the welfare gains from migration subsidies come from providing better insurance for vulnerable rural households rather than correcting spatial misallocation by relaxing credit constraints for those with high productivity in urban areas that are stuck in rural areas.

Keywords: Risk; Insurance; Rural-urban gaps; Field experiment; Rural-urban migration; Spatial misallocation (search for similar items in EconPapers)
JEL-codes: J61 O11 O15 R23 (search for similar items in EconPapers)
Date: 2022-01-04
New Economics Papers: this item is included in nep-dge, nep-his, nep-ias, nep-lab and nep-ure
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https://www.minneapolisfed.org/research/sr/sr635.pdf

Related works:
Working Paper: The Welfare Effects of Encouraging Rural-Urban Migration (2018)
Working Paper: The Welfare Effects of Encouraging Rural-Urban Migration (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:93606

DOI: 10.21034/sr.635

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