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

Project Description

Jules Gazeaud

Nova School of Business and Economics and NOVAFRICA

Eric Mvukiyehe

The World Bank

Olivier Sterck

University of Oxford

ISSN 2183-0843
Working Paper No 2004
June 2020

Abstract

Will the fast expansion of cash-based programming in developing countries increase international migration? Theoretically, cash transfers may favor international migration by relaxing liquidity, credit, and risk constraints. But transfers,especially those conditional upon staying at home, may also increase the opportunity cost of migrating abroad. 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 migration to Mayotte – the neighboring and richer French Island – by 38 percent, from 7.8% to 10.8%. The increase in migration is explained by the alleviation of liquidity and risk constraints, and by the fact that
the program did not increase the opportunity cost of migration for likely migrants.

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