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This study explores to what extent migration has contributed to improved living standards of individuals in Tanzania. Using a thirteen-year panel survey, we find that migration between 1991 and 2004 added 36 percentage points to consumption growth. Although moving out of agriculture resulted in much higher growth than staying in agriculture, growth was always greater in any sector if the individual physically moved. As to why more people do not move given the high returns to geographical mobility, analysis finds evidence consistent with models in which exit barriers set by home communities prevent the migration of some categories of people. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Most risk-sharing tests on developing country data are conducted at the level of the village; generally, the full risk-sharing hypothesis is rejected. This paper uses detailed data on all insurance networks within a village in Tanzania; networks are not clustered but largely overlapping. We test whether full risk-sharing occurs within these networks. While village level full-insurance cannot be rejected for food consumption, we find evidence consistent with at least partial insurance of non-food consumption via networks.

A funeral is a costly occasion. This paper studies indigenous insurance institutions developed to cope with the high costs of funerals, based on evidence from rural areas in Tanzania and Ethiopia. These institutions are based on well-defined rules and regulations, often offering premium-based insurance for funeral expenses. Increasingly, they are also offering other forms of insurance and credit to cope with hardship. The paper argues that the characteristics and inclusiveness of these institutions make them well-placed as models to broaden insurance provision and other developmental activities in these communities. The history of these institutions is characterised by a resistance to attempts of political capture, and helps to understand their apparent resistance to engage more broadly with NGOs and government agencies. As a result, any attempt to expand their activities will have to be done cautiously.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

the participants of the AAAE, CSAE, EAAE conferences and LICOS seminar series and the anonymous reviewers for their constructive comments. This study was financed with Methusalem Funding, DOE-B9549-Meth/08/01 and by The European Commission, Joint Research Centre D.4, Seville. The information and views set out in this report are those of the authors and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the Commission nor any person acting on the Commission's behalf may be held responsible for the use, which may be made of the information contained therein.

A rather unique panel tracking more than 3300 individuals from households in rural Kagera, Tanzania during 1991/4-2010 shows that about 1 out of 2 individuals/households who exited poverty did so by transitioning out of agriculture into the rural nonfarm economy or secondary towns. Only 1 out of 7 exited poverty by migrating to the big cities, even though those moving to the city experienced on average faster consumption growth. Further analysis of a much larger crosscountry panel of 51 developing countries cannot reject that rural diversification and secondary town development lead to more inclusive growth patterns than metropolitization. Indications are that this follows because more of the poor find their way to the rural nonfarm economy and secondary towns, than to distant cities. The development discourse would benefit from shifting beyond the rural-urban dichotomy and focusing more instead on how best to urbanize and develop its rural nonfarm economy and secondary towns.

In economic literature insurance networks are often treated as exogenous institutions. Frequently, the assumption is made that some clearly identifiable group (e.g. 'the whole village' or 'the extended family') constitutes an insurance network. Still, theory suggests that the formation of insurance links depends on a myriad of factors related to smooth information flows, norms, trust, the ability to punish, discount rates, group size and the potential gains of cooperation (e.g. how correlated income streams are and the amount of other income smoothing strategies available). Recent research has shown that risk is more likely to be shared in small, tightly knit networks, which do not necessarily coincide with a collection of households delineated on the basis of just one factor like kinship or place of residence. However, so far only few empirical attempts have been made at investigating the determinants of network formation. This paper suggests an approach by which one might present stylized facts on endogenous network formation. Applying it to a data set collected in a Haya village in rural Tanzania, we find that kinship, geographical proximity, the number of common friends, clan membership, religious affiliation and wealth strongly determine the formation of risk-sharing networks. Our data suggest that poor households have less dense networks than the rich, making them more vulnerable in the face of idiosyncratic risk.