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Seasonal Migration and Risk Aversion

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  • Gharad Bryan
  • Shyamal Chowdhury
  • A. Mushfiq Mobarak

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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. An incentive of $8.50 is assigned to households in Bangladesh to out-migrate during the lean season, and document a set of striking facts. The incentive induces 22 per cent of households to send a seasonal migrant, consumption at the origin increases by 30 per cent (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. A model with these features is tested by examining heterogeneity in take-up and re-migration, and by conducting a new experiment with a migration insurance treatment. Several pieces of evidence consistent with the model are documented. [BREAD Working Paper No. 319]. URL:[http://ipl.econ.duke.edu/bread/papers/working/319.pdf].

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Paper provided by eSocialSciences in its series Working Papers with number id:4650.

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Date of creation: Dec 2011
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Handle: RePEc:ess:wpaper:id:4650

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Keywords: Migration; Risk Aversion; Asia ; Sub-Saharan Africa; pre-harvest; agrarian areas; poverty; hunger; northwestern Bangladesh; developing countries; capital investments; productivity; health; education; trade; agriculture; Bangladeshi households;

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Cited by:
  1. Douglas Gollin & David Lagakos & Michael E. Waugh, 2011. "The Agricultural Productivity Gap in Developing Countries," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 11-14, New York University, Leonard N. Stern School of Business, Department of Economics.
  2. Grant Miller & A. Mushfiq Mobarak, 2013. "Gender Differences in Preferences, Intra-Household Externalities, and Low Demand for Improved Cookstoves," NBER Working Papers, National Bureau of Economic Research, Inc 18964, National Bureau of Economic Research, Inc.
  3. David McKenzie & Emily Beam & Dean Yang, 2013. "Unilateral Facilitation Does Not Raise International Labor Migration from the Philippines," CReAM Discussion Paper Series, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London 1319, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  4. Rentschler, Jun E., 2013. "Why resilience matters - the poverty impacts of disasters," Policy Research Working Paper Series, The World Bank 6699, The World Bank.
  5. David McKenzie, 2012. "Learning about migration through experiments," CReAM Discussion Paper Series, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London 1207, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  6. John Gibson & David McKenzie & Halahingano Rohorua, 2013. "Development Impacts of Seasonal and Temporary Migration: A Review of Evidence from the Pacific and Southeast Asia," CReAM Discussion Paper Series, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London 1308, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  7. 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, Institute of Developing Economies, Japan External Trade Organization(JETRO) 460, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  8. Michael Clemens and Timothy N. Ogden, 2014. "Migration as a Strategy for Household Finance: A Research Agenda on Remittances, Payments, and Development- Working Paper 354," Working Papers, Center for Global Development 354, Center for Global Development.
  9. Michael Greenstone & B. Kelsey Jack, 2013. "Envirodevonomics: A Research Agenda for a Young Field," NBER Working Papers, National Bureau of Economic Research, Inc 19426, National Bureau of Economic Research, Inc.
  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, Centre for the Study of African Economies, University of Oxford 2014-16, Centre for the Study of African Economies, University of Oxford.
  11. Baez, Javier E. & Kronick, Dorothy & Mason, Andrew D., 2012. "Rural Households in a Changing Climate," IZA Discussion Papers, Institute for the Study of Labor (IZA) 6872, Institute for the Study of Labor (IZA).

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