Migration costs and observational returns to migration in the developing world

Type Working Paper - NBER Working Papers
Title Migration costs and observational returns to migration in the developing world
Author(s)
Volume 26868
Publication (Day/Month/Year) 2020
URL http://www.nber.org/papers/w26868
Abstract
Recent studies find that observational returns to rural-urban migration are near zero in three developing countries. We revisit this result using panel tracking surveys from six countries, finding higher returns on average. We then interpret these returns in a multi-region Roy model with heterogeneity in migration costs. In the model, the observational return to migration confounds the urban premium and the individual benefits of migrants, and is not directly informative about the welfare gain from lowering migration costs. Patterns of regional heterogeneity in returns, and a comparison of experimental to observational returns, are consistent with the model’s predictions.

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