Migration and Informal Insurance: Evidence from a Randomized Controlled Trial and a Structural Model

Costas Meghir, A Mushfiq Mobarak, Corina Mommaerts and Melanie Morten

The Review of Economic Studies, 2022, vol. 89, issue 1, 452-480

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: Informal insurance; Migration; Bangladesh; RCT; D12; D91; D52; O12; R23 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:89:y:2022:i:1:p:452-480.

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