TY  - JOUR
AU  - Lagakos, David
AU  - Mobarak, Ahmed Mushfiq
AU  - Waugh, Michael E
TI  - The Welfare Effects of Encouraging Rural-Urban Migration
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 24193
PY  - 2018
Y2  - January 2018
DO  - 10.3386/w24193
UR  - http://www.nber.org/papers/w24193
L1  - http://www.nber.org/papers/w24193.pdf
N1  - Author contact info:
David Lagakos
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
E-Mail: lagakos@bu.edu

Ahmed Mushfiq Mobarak
Yale School of Management
135 Prospect Street
Box 208200
New Haven, CT 06520
Tel: 203/432-5787
E-Mail: ahmed.mobarak@yale.edu

Michael E. Waugh
Stern School of Business
New York University
44 West Fourth Street, Suite 7-160
New York, NY 10012
Tel: 212/998-0288
E-Mail: mwaugh@stern.nyu.edu
AB  - 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.
ER  -