This paper examines the formation of risk sharing networks in the rural Philippines. We find that geographic proximity-possibly correlated with kinship-is a major determinant of mutual insurance links among villagers. Age and wealth differences also play an important role. In contrast, income correlation and differences in occupation are not determinants of network links. Reported network links have a strong effect on subsequent gifts and loans. Gifts between network partners are found to respond to shocks and to differences in health status. From this we conclude that intra-village mutual insurance links are largely determined by social and geographical proximity and are only weakly the result of purposeful diversification of income risk. The paper also makes a methodological contribution to the estimation of dyadic models.
This article uses recent household survey data from the Kayes area (western Mali) to analyse the determinants of remittances from both internal and international migration. The underlying assumption is that remittances are part of an insurance contract between the migrant and his family. Although this idea is not new, few tests have appeared in the recent literature. After a discussion of various measures of crop income shocks, we employ Powell's censored least absolute deviation (CLAD) estimators in addition to more standard parametric estimators to assess the influence of shocks on remittance behaviour. In contrast to Heckman's two-step or the Tobit estimator, Powell's estimator is consistent in the presence of heteroscedasticity and is robust to violations of the normality assumption for the residuals. Regression results bring some support for the view that insurance is an important motivation for remittances. This welfare function should be taken into account by policy-makers in the design of migration policies.
Interpersonal relationships have long been suspected of shaping agrarian institutions, probably because weak formal institutions must be supplemented by interpersonal trust. This is particularly true for informal risk sharing, a fundamental risk coping mechanism for the rural poor (e.g.
Previous research has shown that in many low and middle income countries micro and small entrepreneurs achieve relative high marginal returns to capital but show only very low reinvestment rates. Existing research is rather inconclusive about the possible causes. We explore whether forced solidarity, i.e. abusive demands by the family and kin hinder entrepreneurs to save and to invest. We start from a relatively simple theoretical model in which households consume and pursue different income generating activities, mainly the production of goods and services and the engagement in dependent wage work outside the household. Value added of the household business is subject to a solidarity tax imposed by the household's wider family and kin-group. In this model a higher solidarity tax leads to a reallocation of productive resources away from household production to other income generating activities and leisure. We use an original data set of West-African migrant entrepreneurs to see whether the empirical observation is consistent with the predictions of the model. We find some evidence that family and kinship structures within the city enhance labour effort and the use of capital. However, closeness to the area of origin seem to have adverse effects on both.
Does migrants' experience abroad provide an earnings premium for wage earners and/or a productivity advantage for entrepreneurs? In terms of earnings, we find that experience abroad results in a substantial wage premium for migrants returning from an OECD country but not for other return migrants. Past migration in an OECD country also results in a productive advantage for returnees who became entrepreneurs upon returning. However, the low share of return migrants in the population of WAEMU countries suggests that the effectiveness of return migration as a driver of development is only moderate. L'expérience migratoire est-elle valorisable? Une analyse empirique sur données collectées auprès de migrants de retour et de nonmigrants en Afrique de l'Ouest RÉSUMÉ-Les migrants bénéficient-ils d'une prime salariale sur le marché du travail de leur pays d'origine une fois rentrés au pays ? Qu'en est-il pour ceux qui dirigent une entreprise ou sont à leur compte? Les résultats de nos analyses suggèrent que les migrants de retour perçoivent une prime salariale forte lorsqu'ils reviennent d'un pays de l'OCDE. Le même résultat est observé pour ceux ayant le statut d'entrepreneurs. Cependant, étant donnée la faible proportion de migrants de retour dans la population des pays de la région, l'impact de la migration de retour sur le développement ne peut être que modéré. Acknowledgments: The authors thank François Roubaud and the PARSTAT project for making the data available for this work. The authors acknowledge financial support from OECD/DELSA under the Return Migration and Development Programme. They also thank Gilles Spielvogel, Ira Gang, Jacklin Wahba and three anonymous referees for their useful comments on a previous draft. The usual disclaimer applies.
International audienceThe economic literature provides much evidence of the positive impact of social capital on migrants' economic outcomes, in particular through assistance upon arrival and insurance in times of hardship. Yet, although much less documented, migrant networks may well have a great influence on remittances to their home country and particularly to their origin households. Given all the services provided by the network, the fear of being ostracized by network members and being left with no support could provide incentives for migrants to commit to prevailing redistribution norms. In this perspective, remittances may be a fee that migrants pay to get access to network services. In this paper, we thus analyze to what extent migrant networks in the destination country influence the degree to which migrants meet the claims of those left behind. We first review existing models of remitting behavior and investigate how the potential role of networks could affect their main predictions. We then provide a simple illustrative theoretical framework to account for the double impact networks may have on remitting behavior, through the provision of services to migrants and the spread of information flows between home and host countries. We finally use an original dataset of 602 Senegalese migrants residing in France and Italy to explore the main predictions of our model
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