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Seasonal Migration and Risk Aversion

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  • Gharad Bryan
  • Shyamal Chowdhury
  • A. Mushfiq Mobarak

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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  • Gharad Bryan & Shyamal Chowdhury & A. Mushfiq Mobarak, 2011. "Seasonal Migration and Risk Aversion," Working Papers id:4650, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:4650
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    Cited by:

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    4. T. H. Gindling & Nadwa Mossaad & David Newhouse, 2016. "How Large are Earnings Penalties for Self-Employed and Informal Wage Workers?," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-39, December.
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    8. Juan Miguel Jiménez Riveros, 2019. "Voy a la ciudad, voy a trabajar?: Costos de oportunidad de la tierra en la migración rural-urbana en Colombia y su efecto sobre el ingreso," Documentos CEDE 17197, Universidad de los Andes, Facultad de Economía, CEDE.
    9. Maria Waldinger, 2015. "The effects of climate change on internal and international migration: implications for developing countries," GRI Working Papers 192, Grantham Research Institute on Climate Change and the Environment.
    10. Dercon, Stefan & Orkin, Kate & Bernard, Tanguy & Taffesse, Alemayehu, 2014. "The Future in Mind: Aspirations and Forward-Looking Behaviour in Rural Ethiopia," CEPR Discussion Papers 10224, C.E.P.R. Discussion Papers.
    11. Collier, Paul & Dercon, Stefan, 2014. "African Agriculture in 50Years: Smallholders in a Rapidly Changing World?," World Development, Elsevier, vol. 63(C), pages 92-101.
    12. Das, Narayan & de Janvry, Alain & Mahmood, Sakib & Sadoulet, Elisabeth, 2014. "Migration as a risky enterprise: A diagnostic for Bangladesh," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6574658k, Department of Agricultural & Resource Economics, UC Berkeley.
    13. Gindling,T. H. & Mossaad,Nadwa & Newhouse,David Locke, 2016. "Earnings premiums and penalties for self-employment and informal employees around the world," Policy Research Working Paper Series 7530, The World Bank.
    14. Julia Garlick & Murray Leibbrandt & James Levinsohn, 2016. "Individual Migration and Household Incomes," NBER Working Papers 22326, National Bureau of Economic Research, Inc.
    15. Michael Greenstone & B. Kelsey Jack, 2013. "Envirodevonomics: A Research Agenda for a Young Field," NBER Working Papers 19426, National Bureau of Economic Research, Inc.
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    More about this item

    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;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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