We analyze how internal labor migration facilitates shock coping in rural economies. Employing high precision satellite data, we identify objective variations in the inundations generated by a catastrophic typhoon in Vietnam and match them with household panel data before and after the shock.We find that, following a massive drop in income, households cope mainly through labor migration to urban areas. Households with settled migrants ex-ante receive more remittances. Non-migrant households react by sending new members away who then remit similar amounts than established migrants. This mechanism is most effective with long-distance migration, while local networks fail to provide insurance. JEL: Q12; R23; Q54.Keywords: Risk Sharing; Internal Migration; Natural Disasters; Vietnam. * Corresponding author: André Gröger, Goethe University Frankfurt, email: agroeger@wiwi.unifrankfurt.de. Yanos Zylberberg, University of Bristol, email: yanos.zylberberg@bristol.ac.uk. We are grateful to Bob Baulch, Martina Björkman Nyqvist, Esther Duflo, Guido Friebel, Corrado Giulietti, Dany Jaimovich, Stephan Klasen, Steffen Lohmann, Rocco Macchiavello, Teresa Molina Millán, Dilip Mookherjee, Hillel Rapoport, Isabelle Sin, Steven Stillman, Alessandro Tarozzi, Sebastian Vollmer, and two anonymous referees for useful discussions and comments. We also thank participants at the

No abstract

This article investigates the impact of negative income shocks in migrant destination countries around the world on the domestic and international labor migration decisions of their family members left behind at origin. Exploiting differences in labor market shocks across and within destinations during the Great Recession, I find large and heterogeneous effects on both types of migration decisions. Poor migrant households reduced domestic and increased international labor migration in response to the shock. Rich migrant households remained largely unaffected. I provide a theoretical framework, which rationalizes this heterogeneity by the relative magnitudes of income and substitution effects caused by the shock. The results imply a deterioration in the skill selection of aggregate international migrant flows as poor households had below average skill levels. New international migrants targeted the same destinations as established ones from the same household, providing evidence of strong kinship migration networks. The results show that domestic and foreign migration decisions are interrelated and jointly determine aggregate migration flows.