Underinvestment in a Profitable Technology: the Case of Seasonal Migration in Bangladesh

This paper presents the results of a financial intervention in northwestern Bangladesh intended to promote out-migration to nearby urban areas during the lean season before harvest in order to mitigate famine (monga). This is in order to understand whether this is a viable mitigation strategy, and if so why it has not been employed more often. We randomly assign an $8.50 incentive to households in Bangladesh to out-migrate during the lean season, and document a set of striking facts. The incentive induces 22% of households to send a seasonal migrant, consumption at the origin increases by 30% (550-700 calories per person per day) for the family members of induced migrants, and follow-up data show that treated households continue to re-migrate at a higher rate after the incentive is removed. The migration rate is 10 percentage points higher in treatment areas a year later, and three years later it is still 8 percentage points higher.