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April 1, 2013

Seasonal Migration within Low-Income Countries

Editor’s note: This article was published under our former name, Open Philanthropy. Some content may be outdated. You can see our latest writing here.

This is a writeup of a shallow investigation, a brief look at an area that we use to decide how to prioritize further research.

In a nutshell

  • What is the problem? Domestic seasonal migration may carry large benefits for migrants and their families, but some people who might benefit from migration may not be taking part.
  • What are possible interventions? A funder might support or expand the micro-credit or conditional cash transfer migration support programs that have been studied in Bangladesh, or fund more studies of the impact of such programs in different settings to help address the question of generalizability.
  • Who else is working on it? The authors of the one randomized study to date are planning replications in other countries. It is unclear whether the partner organization from the study will be expanding the program studied to other parts of Bangladesh.

What is the problem?

Seasonal migration from rural to urban areas in developing countries may carry large benefits for the migrants and their families under certain circumstances.[1]“We estimate large returns: migration induced by our intervention increases food and non-food expenditures of migrants’ family members remaining at the origin by 30-35%, and improves their caloric intake by 550-700 calories per person per day. On an initial investment of about $6-$8 (the … Continue reading However, some people who might be able to benefit from domestic migration may not be taking part.

We know of one randomized controlled trial on this topic, which has driven our interest in the area. It was conducted in Rangpur, a region of rural Bangladesh that persistently suffers from pre-harvest famines.

A randomized study of incentives to migrate

Bryan, Chowdhury, and Mobarak ran a multi-arm cluster-randomized trial with 100 villages:[2] Bryan, Chowdhury, and Mobarak 2011, pgs 9-11.

  • 16 villages received information about jobs in potential destination areas, but no subsidies of any kind.[3]“A further 16 villages (consisting of another 304 sample households) were placed in a job information only treatment. These households were given information on types of jobs available in four pre-selected destinations, the likelihood of getting such a job and approximate wages associated with … Continue reading
  • 37 villages were offered cash worth $8.50 (a little more than the cost of round-trip transportation to the destinations) at the origin if they decided to migrate, with another $3 paid if the migrant checked in with the researchers at the destination, and were given the same information as the group above.[4]“703 households in 37 randomly selected villages were offered cash of 600 Taka (~US$8.50) at the origin conditional on migration, and an additional bonus of 200 Taka (~US$3) if the migrant reported to us at the destination during a specified time period. We also provided exactly the same … Continue reading
  • 31 villages were offered 0% interest limited-liability loans in the same amounts as the cash transfers, along with the same information.[5]“The 589 households in the final set of 31 villages were offered the same information and the same Tk 600 + Tk 200 incentive to migrate, but in the form of a zero-interest loan to be paid back at the end of the monga season. The loan was offered by our partner micro-credit NGOs that have a … Continue reading
  • 16 villages served as the control group.[6] “16 of the 100 study villages (consisting of 304 sample households) were randomly assigned to form a control group.” Bryan, Chowdhury, and Mobarak 2011, pg 10.

Both the 0% interest loans and the conditional cash transfers led to large increases in seasonal migration, while “information only” treatment had no apparent effect,[7]

Bryan, Chowdhury, and Mobarak 2011, Table 2, PDF page 60, shows the migration rate in 2008 as:

Cash: 59.0%

Credit: 56.8%

Information only: 35.9%

Control: 36%

leading the authors to combine the cash and credit groups and information only and control groups into “incentivized” and “non-incentivized” groups, respectively, for the remainder of their analysis.[8]“The migration response to the cash and credit incentives are statistically significant relative to control or information, but there is no statistical difference between providing cash and providing credit.13 Since households appear to react very similarly to either incentive, we combine the … Continue reading

In the year the study was conducted, incentives led to a 22 percentage point increase in migration on a baseline level of 36% in the non-incentivized group, a 60% increase.[9]“About a third (35.9%) of households in control villages sent a seasonal migrant. Providing households information about wages and job opportunities at the destination had no effect on the migration rate (the difference in point estimate is 0.0% and is quite tightly estimated). Either households … Continue reading In the following year, when incentives were no longer provided, migration was still 10 percentage points higher in the villages that had previously received cash or credit incentives. Three years later, an 8 percentage point increase persisted in these villages.[10]“The lower panel of table 2 compares re-migration rates in subsequent years across the incentive and non-incentive groups. We conducted follow-up surveys in December 2009 and in July 2011 and asked about migration behavior in the preceding lean seasons, but we did not repeat any of the treatments … Continue reading This increase in seasonal migration led to large and well-identified gains for the families of migrants at the origin, who benefit from remittances:[11]Bryan, Chowdhury, and Mobarak 2011, Table 4, PDF pg 62, columns 4 and 5. We report results from the authors’ instrumental variables estimates with full controls, which are meant to represent the effect of migration on those who the program causes to migrate (as opposed to the average effect … Continue reading

  • 37% increase in expenditures on food[12]
    • 260.139 takas/person/month increase in food expenditures
    • on a control group mean of 702.9 takas/person/month
    • 260.139/ 702.9 = 37.0%
  • 37% increase in total expenditures (including food expenditures)[13]
    • 355.115 takas/person/month increase in total expenditures
    • on a control group mean of 954.1 takas/person/month
    • 355.115/954.1 = 37.2%
  • 38% increase in calories consumed (from a control mean of 2,061/day)[14]
    • 788.118 increase in calories consumed per person per day
    • on a control group mean of 2060.5 calories per person per day
    • 788.118/2060.5 = 38.2%

All of these effects are statistically significant at the 5% level, and persist (statistically significantly, though with attenuation) in the following year even after incentives are removed.[15] Bryan, Chowdhury, and Mobarak 2011, Table 4, PDF pg 62, column 6.

The authors are unable to estimate a direct financial return on investment from the incentives because individuals who did not migrate typically do not work for wages (instead working in self-employment, agriculture or entrepreneurship, which makes estimating control group income difficult).[16]“It is difficult to infer the income these migrants would have received had they not migrated, since we do not have comparable measures of wages and earnings for non-migrants (who engage in a variety of agricultural, self-employment and entrepreneurial tasks at the origin).” Bryan, Chowdhury, … Continue reading They nonetheless find migrants induced by the experiment earn an average of $105 at the destination, most of which is saved or remitted, potentially suggesting high rates of return to the original $8.50+$3 incentive to migrate.[17]“Next we examine the data on migrants’ earnings and savings at the destination to see whether the magnitude of consumption gains we observe at the origin are in line with the amount migrants earn, save and remit. Table 5 shows that migrants earn about $110 (7777 Taka) on average and save about … Continue reading Another approach to estimating the financial returns to the migration incentive is to impute such returns from consumption gains: the authors report an increase in consumption at the source worth about $20/family/month,[18]“In terms of magnitude of effects, monthly consumption expenditures among migrant families increase by about $5 per person, or $20 per household due to induced migration. Our survey only asked about expenditures during the second month of monga, and the modal migrant in our sample had not yet … Continue reading though it’s unclear whether these results were measured during the famine season and how much they might generalize beyond the month of the survey.[19]The authors report, “Our survey only asked about expenditures during the second month of monga, and the modal migrant in our sample had not yet returned from their current migration episode (which includes cases where they may have returned once, but left again). We therefore expect the effects … Continue reading Finally, non-experimentally comparing earnings between incentivized migrants and non-migrants who earned wages or profits, the authors observe a gap of approximately $36 in income.[20]“Observed migrant earnings at the destination (100 Taka per day on average) do compare favorably to the earnings of the sub-sample of non-migrants with salaried employment at the origin (65 Taka per day) and to the profits of small-business entrepreneurs at the origin (61 Taka per day). This … Continue reading Summarizing across these disparate estimates, the $8.5+$3 investment appears to carry a ~2-6x financial return, not counting any benefits from migration during later seasons.[21] The lower bound comes from the $20/family/month estimate, conservatively assuming that the benefits are experienced only in the month of the surveys, while the upper bound comes from the $66 remitted or saved estimate.

The authors argue that it was risk aversion on the part of potential migrants that prevented them from realizing these benefits prior to the intervention.[22]“Our theory takes the view that the poor are not able to take advantage of a profitable opportunity because they are “vulnerable” and afraid of losses (Banerjee, 2004). This is closely related to the conceptualization of poverty in several other models (Kanbur, 1979; Kihlstrom & Laffont, … Continue reading

Although the returns to induced migration appear to have been large in this case, we are not sure how generalizable the results are, as the study took place in an area that may have been unusually appropriate for the intervention:

  • Despite the frequency of seasonal famines, agricultural laborers from the region of the study may seasonally migrate at lower rates than those from other regions of Bangladesh (though this appears to be contested).[23]“Several puzzling stylized facts about household and institutional characteristics and coping strategies motivate the design of our migration experiments. First, seasonal out-migration from the monga-prone districts appears to be low despite the absence of local non-farm employment opportunities. … Continue reading
  • The variation in income and poverty between Rangpur and other areas of Bangladesh appears to be much higher than the variation across seasons within Rangpur, which means that migration may be a more appropriate approach than services like microfinance that facilitate consumption smoothing.[24]“Second, inter-regional variation in income and poverty between Rangpur and the rest of the Bangladesh have been shown to be much larger than the inter-seasonal variation within Rangpur (Khandker & Mahmud, forthcoming). This suggests smoothing strategies that take advantage of inter-regional … Continue reading
  • Existing government and NGO efforts in the region focused on direct subsidy programs rather than migration support.[25]“Finally, both government and large NGO monga-mitigation efforts have concentrated on direct subsidy programs like free or highly-subsidized grain distribution (e.g. “Vulnerable Group Feeding,”), or food-for-work and targeted microcredit programs. These programs are expensive, and the … Continue reading

What are possible interventions?

We see several avenues for a potential funder interested in this area to get involved:

  1. Funding further experimental research on the returns to migration or mechanisms for encouraging migration in other settings. We haven’t investigated this issue, but have the impression that such a study might cost on the order of $500,000-$1,000,000.
  2. Supporting or scaling the program in Bangladesh that was studied (including conditional cash transfers or micro-credit loans).
  3. Advocating to countries, funders, or NGOs to scale up the program to other settings.

We don’t have a sense of how these opportunities might stack up in cost or likely returns, though our intuition is that supporting further research is likely the appropriate first step.

Who else is working on this?

We spoke with Mushfiq Mobarak, one of the authors of the paper describing the randomized controlled trial in Bangladesh, about what other activities are being undertaken. He reported:[26] GiveWell, “Notes from Phone Conversation with Mushfiq Mobarak (11/08/12).”

Replication of Professor Mobarak’s study on seasonal migration in Bangladesh We are pursuing opportunities to replicate our studies in other areas. AusAID has expressed an interest in doing a similar study in Indonesia, and we’ve had early conversations with a foundation about funding a replication in a couple countries in southern Africa, which also have hunger seasons, though those conversations have been more preliminary…

Scaling within Bangladesh

In Bangladesh, the program from the original study was implemented in partnership with the Palli Karma Shohayok Foundation – the umbrella organization for micro-credit NGOs in Bangladesh. PKSF has a very positive approach to all of this because it has their stamp on it. The microfinance groups are generally busy with their main business of doing microcredit with frequent repayment, which forces borrowers to stay at the origin rather than migrate. The kinds of loan programs we’re talking about, with less regular repayment periods, are outside of their regular way of doing business, so I think it will require a little more pushing.

On the government side, I haven’t seen as much interest.

Professor Mobarak directed us to some other scholarship on the returns to seasonal migration but was not aware of any other experiments or NGO efforts aimed at supporting domestic seasonal migration in low-income countries.[27]Other researchers working on migration issues Dean Yang and David McKenzie are doing some experimental research on international migration, which has potentially larger returns than domestic migration. I’m not aware of anyone else doing experiments on domestic migration. In the non-experimental … Continue reading

Questions for further investigation

Our research in this area has been relatively limited, and many important questions remain unanswered by our investigation.

Amongst other topics, our further research on this cause might address:

  • non-experimental estimates of the returns to seasonal migration from other settings (to see whether they comport with the findings from Bangladesh).
  • financial costs and potential humanitarian benefits of replicating or scaling the research conducted by Bryan, Chowdhury, and Mobarak.
  • the existing level of funding that is available for research in this area.

Sources

Footnotes[+]