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Temporary international migration, shocks and informal finance: analysis using panel data

Author

Listed:
  • Chakraborty Tanika
  • Pandey Manish

    (Economics Group, Indian Institute of Management Calcutta, Diamond Harbour Road, Joka, Kolkata (Calcutta), 700104, West Bengal, India)

Abstract

We examine households’ temporary international migration response when faced with shocks in rural Kyrgyzstan. Using a household fixed effects model, we find that while a drought shock increases migration, a winter shock reduces migration. We argue that this difference is because of the trade-off between two effects of a shock for a household: loss of income and increase in the need for labor services. Migration increases when the former effect of a shock dominates and it reduces when the latter effect dominates. We explore these mechanisms further, and find that when households have easier access to informal finance the migration response is muted only for shocks for which the adverse income effect dominates. These findings provide evidence in favor of our proposed mechanisms through which shocks affect migration.

Suggested Citation

  • Chakraborty Tanika & Pandey Manish, 2022. "Temporary international migration, shocks and informal finance: analysis using panel data," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 13(1), pages 1-19, January.
    • Handle: RePEc:vrs:izajdm:v:13:y:2022:i:1:p:19:n:7
    DOI: 10.2478/izajodm-2022-0008
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    More about this item

    Keywords

    temporary migration; shocks; insurance; informal finance; Asia; Kyrgyzstan;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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