CFDP 2185R3

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


Publication Date: July 2019

Revision Date: August 2020December 2020January 2021

Pages: 95


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, R23

JEL Classification Codes: D12D91D52O12R23

See CFDP Version(s): CFDP 2185CFDP 2185RCFDP 2185R2

See CFP: CFP 1764