Effects of Emigration on Rural Labor Markets

63 Pages Posted: 16 Oct 2017

See all articles by Agha Akram

Agha Akram

Evidence Action

Shyamal Chowdhury

The University of Sydney

Ahmed Mushfiq Mobarak

Yale School of Management; Yale University - Cowles Foundation

Date Written: October 2017


Rural to urban migration is an integral part of the development process, but there is little evidence on how out-migration transforms rural labor markets. Emigration could benefit landless village residents by reducing labor competition, or conversely, reduce productivity if skilled workers leave. We offer to subsidize transport costs for 5792 potential seasonal migrants in Bangladesh, randomly varying saturation of offers across 133 villages. The transport subsidies increase beneficiaries’ income due to better employment opportunities in the city, and also generate the following spillovers: (a) A higher density of offers increases the individual take-up rate, and induces those connected to offered recipients to also migrate. The village emigration rate increases from 35% to 65%. (b) This increases the male agricultural wage rate in the village by 4.5-6.6%, and the available work hours in the village by 11-14%, which combine to increase income earned in the village, (c) There is no intra-household substitution in labor supply, but primary workers within households earn more during weeks in which many of their village co-residents moved away. (d) The wage bill for agricultural employers increases, which reduces their profit, with no significant change in yield. (e) Food prices increase by 2.7% on net, driven by an increase in the price of (fish) protein, and offset by (f) a decrease in the price of non-tradables like prepared food and tea. Seasonal migration subsidies not only generate large direct benefits, but also indirect spillover benefits by creating slack in the village-of-origin labor market during the lean season.

Suggested Citation

Akram, Agha and Chowdhury, Shyamal and Mobarak, Ahmed Mushfiq, Effects of Emigration on Rural Labor Markets (October 2017). NBER Working Paper No. w23929. Available at SSRN: https://ssrn.com/abstract=3053719

Agha Akram (Contact Author)

Evidence Action ( email )

1875 K Street NW, 4th floor
Washington, DC 20006
United States

Shyamal Chowdhury

The University of Sydney ( email )

University of Sydney
Sydney, NC NSW 2006

Ahmed Mushfiq Mobarak

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-5787 (Phone)

HOME PAGE: http://mba.yale.edu/faculty/profiles/mobarak.shtml

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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