Risk Sharing and Internal Migration

Abstract

Over the past two decades, more than half the population in our sample of rural Tanzanians has migrated out of their home-communities. We hypothesize that this powerful current of internal migrants is changing the nature of traditional institutions such as informal risk sharing. Mass internal migration has created geographically disperse networks, on which we collected detailed panel data. By quantifying how shocks and consumption co-vary across linked households we show that, while both migrants and stayers insure negative shocks to stayers, there is no one in the network who insures the migrants' negative shocks. While migrants do share some of their positive shocks, they ultimately end up nearly twice as rich as those at home by 2010, despite practically identical baseline positions in the early nineties prior to migration. Taken together, these findings point to migration as a risky, but profitable endeavour, for which the migrant will bear the risk and also reap most of the benefit. We interpret these results within the existing literature on risk-sharing and on the disincentive effects of redistributive norms.JEL codes: O12, O15, O17, R23

Internal Migration and Vulnerability to Poverty in Tanzania

“…Our results are consistent with those of Hirvonen and Lilleør (2015) and De Weerdt and Hirvonen (2016), who used the same data set for Kagera. Hirvonen and Lilleør (2015) established the existence of links between migrants and their home communities, both during the migration spell and following the return migration.…”

“…Hirvonen and Lilleør (2015) established the existence of links between migrants and their home communities, both during the migration spell and following the return migration. De Weerdt and Hirvonen (2016) find evidence that migrants feel an obligation toward family members who remain at home, consistent with social norms associated with kinship (Lévi-Strauss 1969). Those who remain at home benefit from the migrants' positive shocks and receive some insurance against their own negative shocks, but do not suffer from the migrants' negative shocks.…”

“…The migrant can be localized in a nearby village, elsewhere in the same region, or elsewhere in Tanzania. The article adopts the definition of migration proposed by Beegle, De Weerdt, and Dercon (2011) and De Weerdt and Hirvonen (2016), according to which a migrant is a household member found not to reside in the baseline community at the end of the sample period in 2010. The subsample of individuals (specifically PHHMs) who moved during the period considered is composed of 197 people and is balanced in terms of gender (53 percent of migrants are females).…”

Land markets and migration trends in Tanzania: A qualitative‐quantitative analysis

“…The region of Kagera, Tanzania is further characterized by extensive migration flows that have garnered considerable attention in the literature (Beegle et al, 2011;Kudo, 2015;Hirvonen & Lilleør, 2015;de Weerdt & Hirvonen, 2016;Hirvonen, 2016). 4 In a longitudinal study that tracked individuals from Kagera over ten years, Beegle et al (2011) find that roughly half of the sample moved from their home village during this interval.…”

“…And where land liquidity facilitates migration, this may take the form of restrictions on the market. Even when out-migrants send remittances to their families left behind, as has been observed in the Kagera setting (de Weerdt & Hirvonen, 2016), it is possible that those who are able to erect exit barriers (for example, clan leaders) are not the direct beneficiaries and may still aim to limit out-migration. In Abraham's case, the clan prohibited all sales, 7 but a clan can alternately re-…”