RURAL LABOR MIGRATION: Migrant Network, Information, and Hysteresis

Abstract

We investigate a rural household's decision to migrate part or all of its labor to urban areas. Labor migrates only when the expected return passes a hurdle rate that is affected by migration networks. We develop a dynamic model of incomplete information, and characterize the unique pure strategy perfect Bayesian equilibrium. Based on the predictions of the equilibrium, we develop a set of econometric models to estimate the migration decisions. Our results show that more current information helps migration, while the expectation of more information in the future may higher migration.Labor and Human Capital,