Cancelled: Migration as a Substitute for Social Insurance: Evidence from Rural India

This event has been cancelled. Thank you for your interest and we hope to see you at future CGD events.
 

Featuring
Melanie Morten
Yale University

In poor rural areas of developing countries, household incomes can vary significantly from year to year. When faced with an income shock, poor households rely on family and friends for help. Village networks operate like an informal insurance policy. After helping family members in need in one year, a household can expect help in return in the years ahead. Alternatively, a household may self-insure by temporarily migrating. In her new paper, Melanie Morten develops a dynamic model to characterize the relationship between informal risk sharing and temporary migration. She applies her model to data from rural India and shows that risk sharing reduces migration by 55%, and that migration reduces risk sharing by 38%. She also finds that a government run rural employment scheme reduces both informal risk sharing and migration.