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IFS/STICERD/UCL Development Work in Progress Seminar

The Migration Consequences of Input Subsidies

Binta Zahra Diop (Institute for Fiscal Studies)

Thursday 27 October 2022 13:00 - 14:00

Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events. Please check our website listings and Twitter feed @STICERD_LSE for updates.

Unless otherwise specified, in-person seminars are open to the public.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.

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 Britta Augsburg:

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