Migration and Informal Insurance: Evidence from a Randomized Controlled Trial and a Structural ModelAuthor(s):
Publication Date: July 2019
Revision Date: August 2020December 2020January 2021
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.
Keywords: Informal Insurance, Migration, Bangladesh, RCT
JEL Classification Codes: D12, D91, D52, O12, R23CFDP 2185CFDP 2185RCFDP 2185R2