The Welfare Effects of Encouraging Rural-Urban Migration / David Lagakos, Ahmed Mushfiq Mobarak, Michael E. Waugh.

Format:

Book

Author/Creator:

Lagakos, David.

Contributor:

National Bureau of Economic Research.

Mobarak, Ahmed Mushfiq.

Waugh, Michael E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24193.

NBER working paper series no. w24193

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

This paper studies the welfare effects of encouraging rural-urban migration in the developing world. To do so, we build a dynamic incomplete-markets model of migration in which heterogenous agents face seasonal income fluctuations, stochastic income shocks, and disutility of migration that depends on past migration experience. We calibrate the model to replicate a field experiment that subsidized migration in rural Bangladesh, leading to significant increases in both migration rates and in consumption for induced migrants. The model's welfare predictions for migration subsidies are driven by two main features of the model and data: first, induced migrants tend to be negatively selected on income and assets; second, the model's non-monetary disutility of migration is substantial, which we validate using using newly collected survey data from this same experimental sample. The average welfare gains are similar in magnitude to those obtained from an unconditional cash transfer, though migration subsidies lead to larger gains for the poorest households, which have the greatest propensity to migrate.

Notes:

Print version record

January 2018.