Underinvestment in a Profitable Technology: The Case of Seasonal Migration in Bangladesh

S-Tier
Journal: Econometrica
Year: 2014
Volume: 82
Issue: 5
Pages: 1671-1748

Authors (3)

Gharad Bryan (not in RePEc) Shyamal Chowdhury (not in RePEc) Ahmed Mushfiq Mobarak (Yale University)

Score contribution per author:

2.681 = (α=2.01 / 3 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Hunger during pre‐harvest lean seasons is widespread in the agrarian areas of Asia and Sub‐Saharan Africa. We randomly assign an $8.50 incentive to households in rural Bangladesh to temporarily out‐migrate during the lean season. The incentive induces 22% of households to send a seasonal migrant, their consumption at the origin increases significantly, and treated households are 8–10 percentage points more likely to re‐migrate 1 and 3 years after the incentive is removed. These facts can be explained qualitatively by a model in which migration is risky, mitigating risk requires individual‐specific learning, and some migrants are sufficiently close to subsistence that failed migration is very costly. We document evidence consistent with this model using heterogeneity analysis and additional experimental variation, but calibrations with forward‐looking households that can save up to migrate suggest that it is difficult for the model to quantitatively match the data. We conclude with extensions to the model that could provide a better quantitative accounting of the behavior.

Technical Details

RePEc Handle
repec:wly:emetrp:v:82:y:2014:i:5:p:1671-1748
Journal Field
General
Author Count
3
Added to Database
2026-01-25