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

Costas Meghir, Ahmed Mobarak, Corina D. Mommaerts and Melanie Morten

No 26082, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D12 D52 J6 O12 R23 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-ias, nep-net and nep-ore
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Published as Costas Meghir & A Mushfiq Mobarak & Corina Mommaerts & Melanie Morten, 2022. "Migration and Informal Insurance: Evidence from a Randomized Controlled Trial and a Structural Model," The Review of Economic Studies, vol 89(1), pages 452-480.

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