Job Market Paper

Overcoming Migration Barriers: The Impact of an Income Smoothing Program for Kenyan Migrants 

[World Bank blog]

Migration to cities can be a gamble for the rural poor in developing countries: a trade-off between the potential upside of higher income growth and the downside of foregone rural earnings. This paper tests whether mitigating potential short-term income loss associated with migration can induce more young rural Kenyans to move to cities. In rural Kenya, I offer 700 young male workers across 111 randomized villages access to an income smoothing program, which provides workers 4 USD for each day of unemployment, conditional on migration to Nairobi. Access to short-term income support in the city more than triples the migration rate over seven months and results in more persistent moves, even after the program ends. These migration effects are also larger than those of an unconditional cash transfer of comparable magnitude. The unemployment program induces migrants who were relatively richer at baseline to migrate compared to control, suggesting that a safety net may lower the opportunity cost and perceived risk of migrating.  Overall, the evidence indicates that appropriately designed migration unemployment benefits can induce persistent moves to urban labor markets, potentially leading to larger wage growth over time.