Review of Economic Studies Vol. 89 No. 1 2022

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

Costas Meghir¹; Ahmed Mushfiq Mobarak¹; Corina Mommaerts²; Melanie Morten³

¹ Yale University and NBER · ² University of Wisconsin-Madison and NBER · ³ Stanford University and NBER

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.

DOI

10.1093/restud/rdab021

Volume

89

Issue

1

Pages

452-480

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓