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Seasonal Migration and Risk Aversion

Gharad Bryan, Shyamal Chowdhury () and Ahmed Mobarak ()

No 8739, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Bangladesh; Migration; Risk Aversion (search for similar items in EconPapers)
JEL-codes: J61 O1 O15 R23 (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-afr, nep-mig and nep-sea
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