Abstract
We document that an experimental intervention offering transport subsidies for poor rural households to migrate seasonally in Bangladesh improved risk sharing. A theoretical model of endogenous migration and risk sharing shows that the effect of subsidizing migration depends on the underlying economic environment. If migration is risky, a temporary subsidy can induce an improvement in risk sharing and enable profitable migration. We estimate the model and find that the migration experiment increased welfare by 12.9%. Counterfactual analysis suggests that a permanent, rather than temporary, decline in migration costs in the same environment would result in a reduction in risk sharing.
Citation
Meghir, Costas, A. Mushfiq Mobarak, Corina Mommaerts, and Melanie Morten. 2022. "Migration and Informal Insurance: Evidence from a Randomized Controlled Trial and a Structural Model." The Review of Economic Studies 89 (1): 452–480. https://doi.org/10.1093/restud/rdab021.