Migration, Remittances and Moral Hazard. Evidence from the Kayes Area (Western Mali)

This article uses recent survey data from the Kayes area (Western Mali) to estimate the effect of migration and remittances on the technical efficiency of agricultural households. A theoretical model is developed, which shows that the more insurance is provided by the migrants, the less incentive their families have to work. A production function using panel data with household-specific fixed effects is estimated to test this hypothesis. The probability of being financially supported by migrants is found to significantly contribute to technical inefficiency. This result should help agricultural policy makers formulate more efficient development strategies in the area.technical inefficiency, moral hazard, risk-coping strategy, migration

The Formation of Risk Sharing Networks.

This paper examines the formation of risk sharing networks in the rural Philippines. We find that geographic proximity–possibly correlated with kinship–is a major determinant of mutual insurance links among villagers. Age and wealth differences also play an important role. In contrast, income correlation and differences in occupation are not determinants of network links. Reported network links have a strong effect on subsequent gifts and loans. Gifts between network partners are found to respond to shocks and to differences in health status. From this we conclude that intra-village mutual insurance links are largely determined by social and geographical proximity and are only weakly the result of purposeful diversification of income risk. The paper also makes a methodological contribution to the estimation of dyadic models.partage du risque; modèle dyadique; dyadic model; Philippines; Network; risk-sharing; Réseau;

Contingent Loan Repayment in the Philippines.

Using data from the Philippines, this article seeks to understand how households in the study area apparently manage to avoid falling into a debt trap in spite of frequent borrowing. Findings suggest that this is achieved via three institutional features. First, most informal debt carries no interest. Second, for all debts, repayment is postponed in case of a borrower’s difficulty; this is the only insurance feature of debt repayment. Third, while debt principal is seldom forgiven or reduced, interest‐bearing debt does not carry additional interest if debt repayment is delayed. This prevents interest charges from accumulating and debt from snowballing.Dette; Crédit;

Risk and Schooling Decisions in Rural Madagascar: a Panel Data Analysis.

La plupart des ménages ruraux malgaches tirent l’essentiel de leurs revenus de l’agriculture et sont exposés à un fort degré d’incertitude en raison de la fréquence et de l’intensité des aléas frappant les champs de culture ou les troupeaux. En l’absence de marchés du crédit ou de l’assurance, des moyens alternatifs pour éliminer ou atténuer les conséquences défavorables de cette incertitude doivent être trouvés par les ménages. Dans cet article, nous envisageons la possibilité que la mise au travail des enfants constitue un mécanisme de gestion des risques. Afin de tester cette hypothèse, nous examinons les déterminants de la scolarisation en cycle primaire d’un échantillon d’enfants issus de ménages ruraux. Nous examinons notamment le rôle des chocs de revenu subis par les ménages sur les probabilités d’entrée (dans) et de sortie hors de l’école de leurs membres en âge d’être scolarisés, en portant une attention particulière aux questions de genre et d’allocation intra-ménage des ressources. Les résultats indiquent que les chocs transitoires de revenu ont un impact significatif sur la probabilité de sortie de l’école mais pas sur la probabilité d’entrer à l’école. Cela suggère que la déscolarisation des enfants les plus âgés constitue un mécanisme de gestion du risque pour les ménages ruraux.Most households in rural Madagascar are engaged in agriculture and derive a large share of their income from the production of food or cash crops and from animal husbandry. However, agricultural yields can be extremely volatile due to weather conditions, pests, insects, rodents and other calamities. As a result, households record large fluctuations in their incomes that must be dealt with. Since the usual consumption-smoothing market mechanisms are quite limited in the Malagasy context, households need to rely on nonmarket mechanisms or to adopt multi-faceted strategies to cope with risk. In this paper, we examine the possibility that parents obtain informal income insurance by letting their children work. We test this hypothesis by examining the relationship between household income shocks and human capital investment in children. In particular, we investigate whether children’s propensity to join school and to drop out of school responds to transient shocks. We also investigate issues such as gender and intrahousehold resource allocation.Stratégies de gestion des risques; Risk-coping strategies; Décision de scolarisation; Schooling decisions; Transitory shocks; Chocs transitoires;

Migration, self selection and returns to education in the WAEMU.

Using data from labour force surveys conducted simultaneously in the capital cities of seven West African Economic and Monetary Union countries, we estimate a model of residential location choice in which expected earnings play a role. The model is first estimated in a reduced form. Estimates are then used to correct for the endogeneity of locational choice in the earnings equations estimated for each country. We find that migration behaviour has a significant effect in shaping earnings differentials between education levels and between the seven capital cities. Corrected predicted earnings in each country are then used as an independent variable in a structural multinomial logit of residential choice. Results show that individuals tend to reside in countries in which their expected earnings are higher than elsewhere.Migration; Self-selection; West Africa;

The Formation of Risk Sharing Networks

This paper examines the endogenous formation of risk sharing networks in the rural Philippines. relationships. We show that geographic proximity is a major determinant of interpersonal We find little evidence that people form relationships to pool income risk. The existence of a pre-existing relationship between two individuals is a major determinant of subsequent gifts and informal loans between them, controlling for other proximity factors. From this we conclude that these transfers and informal loans are embedded in interpersonal relationships. These relationships are largely determined by proximity factors and are only weakly the result of purposeful diversification of income risk. There is, however, some evidence that the formation of risk sharing links is aimed at pooling health risk. The paper also makes a methodological contribution to the estimation of dyadic models

Do remittances affect poverty and inequality ? Evidence from Mali.

Using a 2006 household survey in Mali, we compare current poverty rates and inequality levels with counterfactual ones in the absence of migration and remittances. With proper hypotheses on migrants and a selection model, we are able to impute a counterfactual income for households currently receiving remittances. We show that remittances reduce poverty rates by 5% to 11% and the Gini coefficient by about 5%. Households in the bottom quintiles are more dependent on remittances, which are less substitutable by additional workforce.Indicateurs de pauvreté; Mali; Envois de fonds; Travailleurs migrants;