Migration and Informal Insurance: Evidence from a Randomized Controlled Trial and a Structural Model

95 Pages Posted: 23 Jul 2019 Last revised: 8 Apr 2022

See all articles by Costas Meghir

Costas Meghir

Yale University; Yale University - Cowles Foundation; Institute for Fiscal Studies (IFS); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Ahmed Mushfiq Mobarak

Yale School of Management; Yale University - Cowles Foundation

Corina Mommaerts

University of Wisconsin - Madison - Department of Economics

Melanie Morten

Stanford University

Multiple version iconThere are 4 versions of this paper

Date Written: July 2019

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.

Suggested Citation

Meghir, Costas and Mobarak, Ahmed Mushfiq and Mommaerts, Corina and Morten, Melanie, Migration and Informal Insurance: Evidence from a Randomized Controlled Trial and a Structural Model (July 2019). NBER Working Paper No. w26082, Available at SSRN: https://ssrn.com/abstract=3423795

Costas Meghir (Contact Author)

Yale University ( email )

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Yale University - Cowles Foundation ( email )

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Centre for Economic Policy Research (CEPR)

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Ahmed Mushfiq Mobarak

Yale School of Management ( email )

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HOME PAGE: http://mba.yale.edu/faculty/profiles/mobarak.shtml

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Corina Mommaerts

University of Wisconsin - Madison - Department of Economics ( email )

William H. Sewell Social Science Building
1180 Observatory Drive
Madison, WI 53706-1393
United States

Melanie Morten

Stanford University ( email )

Stanford, CA 94305
United States

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