IFS/STICERD/UCL Development Work in Progress Seminar
The Migration Consequences of Input Subsidies
Binta Zahra Diop (IFS)
Thursday 27 October 2022 13:00 - 14:00
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About this event
Input subsidy programs (ISPs) aim to increase agricultural productivity. For many farmers, however, outmigration may be preferred and more profitable. Using reduced-form and structural estimations, I exploit variations in the roll-out of an ISP in Zambia to understand the determinants of internal migration for credit-constrained farmers. First, I use a difference-in-differences strategy to show that the ISP increases fertilizer adoption but also doubles the rates of individual outmigration. Consistent with farmers being credit constrained, I find that 30% of the variance in total outmigration can be explained by farmers monetizing the subsidy in resale markets. Second, I estimate a structural model to compare the ISP to alternative policy counterfactuals. Working with a model that incorporates a network externality related to fertilizer adoption and use, I find that the ISP with resale markets fosters specialization. I find that an alternative program of cash transfers targeted to the same households would generate 18% lower outmigration and no change in fertilizer adoption relative to the ISP. In contrast, a revenue-neutral non-targeted cash transfer program would substantially increase outmigration, while in-kind transfers would lead to substantial losses in efficiency, reducing both migration (-15%) and fertilizer adoption (-75%).
This seminar series is jointly organized by the IFS, STICERD, and UCL.
IFS/STICERD/UCL Development Economics Work In Progress seminars are held on Thursdays in term time at 13:00-14:00, at the IFS, unless specified otherwise.
Seminar organisers: Oriana Bandiera (STICERD, LSE), Imran Rasul (UCL), Britta Augsburg (IFS) and Jonathan Weigel (LSE).
For further information please contact Sadia Ali: email@example.com.
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