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Seasonal Migration and Risk Aversion

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  • Bryan, Gharad
  • Chowdhury, Shyamal
  • Mobarak, Ahmed Mushfiq

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.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8739.

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Date of creation: Jan 2012
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Handle: RePEc:cpr:ceprdp:8739

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Keywords: Bangladesh; Migration; Risk Aversion;

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References

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Cited by:
  1. Michael Greenstone & B. Kelsey Jack, 2013. "Envirodevonomics: A Research Agenda for a Young Field," NBER Working Papers 19426, National Bureau of Economic Research, Inc.
  2. David McKenzie & Emily Beam & Dean Yang, 2013. "Unilateral Facilitation Does Not Raise International Labor Migration from the Philippines," CReAM Discussion Paper Series 1319, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  3. Baez, Javier E. & Kronick, Dorothy & Mason, Andrew D., 2013. "Rural households in a changing climate," Policy Research Working Paper Series 6326, The World Bank.
  4. John Gibson & David McKenzie & Halahingano Rohorua, . "Development Impacts of Seasonal and Temporary Migration: A Review of Evidence from the Pacific and Southeast Asia," Asia and the Pacific Policy Studies 201412, Crawford School of Public Policy, The Australian National University.
  5. Grant Miller & A. Mushfiq Mobarak, 2013. "Gender Differences in Preferences, Intra-Household Externalities, and Low Demand for Improved Cookstoves," NBER Working Papers 18964, National Bureau of Economic Research, Inc.
  6. Shonchoy, Abu S. & Kurosaki, Takashi, 2014. "Impact of seasonality-adjusted flexible microcredit on repayment and food consumption : experimental evidence from rural Bangladesh," IDE Discussion Papers 460, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  7. Douglas Gollin & David Lagakos & Michael E. Waugh, 2011. "The Agricultural Productivity Gap in Developing Countries," Working Papers 11-14, New York University, Leonard N. Stern School of Business, Department of Economics.
  8. David McKenzie, 2012. "Learning about migration through experiments," CReAM Discussion Paper Series 1207, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  9. Rentschler, Jun E., 2013. "Why resilience matters - the poverty impacts of disasters," Policy Research Working Paper Series 6699, The World Bank.
  10. Tanguy Bernard & Stefan Dercon & Kate Orkin & Alemayehu Seyoum Taffesse, 2014. "The Future in Mind: Aspirations and Forward-Looking Behaviour in Rural Ethiopia," CSAE Working Paper Series 2014-16, Centre for the Study of African Economies, University of Oxford.

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