Migration and Informal Insurance

95 Pages Posted: 3 Sep 2020

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: September 1, 2020

Abstract

Do new migration opportunities for rural households change the nature and extent of informal risk sharing? We experimentally document that randomly offering poor rural households subsidies to migrate leads to a 40% improvement in risk sharing in their villages. Our model of endogenous migration and risk sharing shows that risky and temporary migration opportunities can induce an improvement in risk sharing enabling proļ¬table migration. Accounting for improved risk sharing, the migration experiment increased welfare by 12.9%. However, permanent declines in migration costs improve outside options for households and can lead to reductions in risk sharing. The short-run experimental results for migration subsidies can differ from the longer-run impacts of a policy that permanently subsidizes migration.

Keywords: Informal Insurance, Migration, Bangladesh, RCT

JEL Classification: D12, D91, D52, O12, R23

Suggested Citation

Meghir, Costas and Mobarak, Ahmed Mushfiq and Mommaerts, Corina and Morten, Melanie, Migration and Informal Insurance (September 1, 2020). Available at SSRN: https://ssrn.com/abstract=3684510 or http://dx.doi.org/10.2139/ssrn.3684510

Costas Meghir (Contact Author)

Yale University ( email )

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Yale University - Cowles Foundation ( email )

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Institute for Fiscal Studies (IFS) ( email )

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Centre for Economic Policy Research (CEPR)

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IZA Institute of Labor Economics

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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
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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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