Hidden Income and the Perceived Returns to Migration: Experimental Evidence from Kenya Urban workers in Kenya earn twice as much as rural workers with the same level of education. Why don't more rural workers migrate to cities? In this paper, I use two field experiments to show that low migration is partly due to underestimation of urban incomes by rural Kenyans, and that this inaccurate information can be sustained by migrants' strategic motives to hide income to minimize remittance obligations. I first show that rural Kenyans underestimate big-city incomes considerably, despite the fact that two-thirds of households have a member who has migrated in the past. Parents underestimate their migrant children's incomes by 50% on average, and underestimation is larger when the migrant's incentive to hide income is high—in particular, when parents believe remittance obligations are high and when migrants have no stated desire to induce additional migration. In a first experiment that provides rural households with urban labor market information, treated households update their beliefs about the returns to migration and are 8 percentage points more likely to send a migrant to Nairobi. In a second field experiment, I directly test whether hidden income is distorting the decision to migrate by randomly informing rural households about the extent of hidden income among urban migrants. I find that hidden income dampens migration aspirations: learning about the average degree of hidden income increases planned migration to Nairobi by 13 percentage points.
Intrahousehold Spillovers in the Migration Decision: Evidence from Thailand's Regional Cities Project Barriers to migration can prevent individuals from moving to earn a higher income. In this paper I study how migration barriers interact across members of the same household. Using household survey data from Nang Rong, Thailand, I show that the migration of older-cohort members leads to a significant increase in the subsequent migration of younger-cohort members. I construct an instrument for older-cohort migration by exploiting temporary labor demand shocks induced by the Regional Cities Project, a significant spending initiative by the federal Thai government intended to improve infrastructure in four peripheral Thai cities from 1986-1993. Instrumental variable estimates suggest that each migrant increases the migration probability of her younger family members by 3.1 percentage points. This suggests that migrating can produce spillover effects within the family, and therefore that reductions in barriers to migration can persist across generations. This effect is consistent with a model in which prospective migrants learn about the returns to migration by observing others’ outcomes. Alternative explanations, i.e., stronger migrant networks or a relaxing of credit constraints, do not appear to fully explain this effect.
Research in Progress
Migration under Selective Exit Regimes (with Ran Abramitzky and Isabelle Sin) We test how mobility restrictions affect migrant selection from the origin and success in the destination. We exploit the collapse of the Soviet Union and the sudden removal of emigration restrictions to measure how the performance of economic migrants differs from that of refugees; theory predicts that the latter should perform worse upon arrival but improve faster over time. We also study how migrant selection responds to government attempts to prevent “brain drain,” the exit of skilled workers. Throughout most of its existence, the Soviet Union and its satellite states expended considerable effort keeping borders closed and selectively denying exit visas. It is not clear whether such restrictions are effective in practice, as skilled workers may have the best means of circumventing exit restrictions, and governments may face difficulties identifying who is skilled. Using data from several rounds of the German microcensus and country-by-year variation in the strength of emigration barriers imposed by Soviet satellite states, we test whether emigration restrictions were successful at preventing the exit of skilled workers.
Coarse Perceptions of Risk: Evidence of Spillovers in African Equity Markets (with Pascaline Dupas) We investigate the extent to which country-specific negative shocks in Africa spill over to other countries that are not directly affected by the shock. Using three decades of equity price data on the universe of publicly-listed companies in 9 sub-Saharan African countries, we measure the tendency for sudden, unexpected shocks (such as disease outbreaks and terrorist attacks) to influence markets in unaffected countries. We measure the timing of shocks with systematic Boolean searches of newspaper articles in the months surrounding each shock. We measure the extent to which spillovers occur in excess of what should be expected given continental integration of markets and uncertainty by investors, and quantify impacts on capital markets.