Temporary International Migration and Shocks: Analysis using panel data

We analyze a household’s decision to have temporary international migrants when faced with shocks. We consider a household maximization problem and derive the effects of different kinds of shocks on the migration decision. Using four waves of the Life in Kyrgyzstan panel surveys, we empirically examine these effects. We contribute to the literature by accounting for household level unobserved heterogeneity, distinguishing between onward and return migration, and examining the underlying insurance motive of migration. We find that while agricultural and household specific idiosyncratic shocks have a positive effect on the likelihood to migrate, displacement shocks have a negative effect. The difference between the effects of these shocks is explained by the dynamics of migration. While agricultural and displacement shocks affect return migration, household specific idiosyncratic shocks drive onward migration. We further find that the effect of the displacement and agricultural shocks on onward and return migration are muted when households have easier access to informal borrowing.