Cash Transfers and Migration: Theory and Evidence from a Randomized Controlled Trial

Abstract

Will the fast expansion of cash-based programming in poor countries increase international migration? Theoretically, cash transfers may deter migration by increasing its opportunity cost, or favor migration by relaxing liquidity, credit, and risk constraints. This paper evaluates the impact of a cash-for-work program on migration. Randomly selected households in Comoros were offered up to US$320 in cash in exchange for their participation in public works projects. We find that the program increased international migration by 38 percent, from 7.8% to 10.8%. The increase in migration appears to be driven by the alleviation of liquidity and risk constraints.

Productive Workfare? Evidence from Ethiopia's Productive Safety Net Program

“…Indeed, PSNP infrastructure could lead people to adopt riskier crops, or PSNP transfers could make people less risk averse if they have DARA (decreasing absolute risk aversion) preferences. Previous research has found that workfare programs can lead to higher risk taking among poor households (Gazeaud et al, 2021; Gehrke, 2019; Merfeld, 2020; Taraz, 2021). In that case, households could benefit from higher yields that may not be visible from satellite data.…”

“…Fourth, at a local level, the program could be accompanied by movements of labor out of agriculture, so that overall output remains constant, but output per person increases (Bhargava, 2021; Deininger et al, 2016; Imbert & Papp, 2015). Fifth, at a broader level, public works and transfer programs can affect migration patterns and thereby the availability of labor for agriculture (Gazeaud et al, 2021; Hidrobo et al, 2021; Imbert & Papp, 2020).…”

Cash transfers, migration, and gender norms

“…Financing migration requires access to credit (Angelucci, 2015), as resources are required to afford public transport, housing, or the costs of finding a job at the destination (Orrenius & Zavodny, 2005;McKenzie and Rapoport 2007;Imbert & Paap, 2020). Risk-averse households favor low-risk, low-return investments out of fear of falling below a consumption threshold (Bryan et al, 2014;Gazeaud et al, 2021). More often, internal migration is employed to smooth consumption (Lee, 2021), given local labor shortages (Jessoe et al, 2016), moorings (Kosec et al, 2018), and social norms (Fernando, 2020) rendering the departure of working-age household members undesirable.…”

“…Our evaluation aims to offer evidence from Mali on the relationship between constraints on income and migration. Only a small number of studies from Africa have examined the extent to which the provision of cash transfers (CTs) (Mueller et al, 2020) and cash-for-work programs alter migration patterns (Gazeaud et al, 2021;Hoddinott & Mekasha, 2020). Context and program design are important factors in such studies.…”

Can Information and Alternatives to Irregular Migration Reduce “Backway” Migration from the Gambia?

“…Bryan et al (2014) found that paying for a $8.50 bus ticket spurred significant rural-urban seasonal migration flows in the lean season in Bangladesh. It is less clear whether such an approach can succeed with international migration in an African context, although Gazeaud et al (2021) find that cash transfers in Comoros did increase migration rates to the neighboring richer island of Mayotte, suggesting that alleviating financial constraints may facilitate regional migration. Giambra and McKenzie (2021) re-analyze seven experiments that generated domestic job opportunities in self-employment, and find these programs generate modest reductions in domestic migration.…”