Labor Migration, Microcredit and Economic Development Issues in South Asia
Saturday, Jan. 5, 2019 2:30 PM - 4:30 PM
- Chair: Ahmed Mushfiq Mobarak, Yale University
Poverty and Migration in the Digital Age: Experimental Evidence on Mobile Banking in Bangladesh
AbstractMobile banking technology makes it cheaper and easier to move money across distances. Against a background of rapid urbanization in Bangladesh, we estimate the impact of mobile banking in a sample of "ultra-poor" rural households paired to relatives who migrated to find jobs in the capital. The study shows that diffusion of the gains from urbanization is constrained by barriers to remitting money. The technology substantially improved rural economic conditions by better connecting villagers to urban migrants, an idea that contrasts with (and complements) innovations like microfinance that focus on rural self-employment. Participants were trained on how to sign up for and use mobile banking accounts in a randomized encouragement design costing less than $12 per family. Active use of accounts increased substantially, from 22% in the rural control group to 70% in the rural treatment group, and urban-to-rural remittances increased by 30% one year later (relative to the control group).
For active users, rural consumption increased by 7.5% and extreme poverty fell. Rural households borrowed less, saved more, and fared better in the lean season. The rate of child labor fell, and we find weak but positive evidence that schooling improved. Rural health indicators were unchanged. Migrants, however, bore costs. They were slightly more likely to be in garment work, saved more, and were less likely to be poor. However, migrants actively using mobile banking reported worse physical and emotional health.
No Place Like Home: Long-Run Impacts of Early Child Health and Family Planning on Economic and Migration Outcomes
AbstractEarly childhood health and nutrition programs are believed to improve adult living standards through the effect of improved human capital on labor market opportunities. We take advantage of a quasi-randomly placed Maternal and Child Health and Family Planning program in a Matlab Bangladesh, to examine program effects on economic and migration outcomes 35 years after program start. Program interventions rolled out between 1977–1988 starting with family planning and maternal health, and introducing key child health interventions in 1982. For men born when both family planning and child health interventions were available, a related paper shows treatment group are taller and more educated. This paper shows that treated men work in more skilled jobs and are more entrepreneurial, but surprisingly, average annual earnings are similar to the comparison group. This is in driven in part by lower migration rates to urban areas of Bangladesh, leading to on average lower wages, but also reducing the potentially high non-monetary costs of migrating. Women also benefited. They work more in paid agriculture activities and have more personal savings and credit. However, men born before the child health interventions were available did not fare as well earning significantly less and migrating less to international destinations. The fact that the program led to better job market outcomes and reduced migration rates for the child health cohort is important not only for the debate about the long-term effects of health, but also for migration policy, where there is concern about a general increase in international and rural-urban labor migration.
Are There Too Many Farms in the World? Labor-Market Transaction Costs, Machine Capacities and Optimal Farm Size
AbstractThis paper seeks to explain the U-shaped relationship between farm productivity and farm scale - the initial fall in productivity as farm size increases from its lowest levels and the continued upward trajectory as scale increases after a threshold - observed across the world and in low-income countries. We show that the existence of labor-market transaction costs can explain why the smallest farms are most efficient, slightly larger farms least efficient and larger farms as efficient as the smallest farms. We show that to explain the rising upper tail of the U characteristic of high-income countries requires there be economies of scale in the ability of machines to accomplish tasks at lower costs at greater operational scales. Using data from the India ICRISAT VLS panel survey we find evidence consistent with these conditions, suggesting that there are too many farms, at scales insufficient to exploit locally-available equipment capacity scale-economies.
- O1 - Economic Development
- J2 - Demand and Supply of Labor