Migration and Technological Change in Rural Households: Complements or Substitutes?

In this paper we study the interrelationship between determinants of migration, conceived as a family strategy, and the potential impact of having a migrant household member on people left behind. Labour migration is often related to poverty but given its lumpy-investment nature, poverty may constitute a motivation to migrate as well as a constraint to do it. We use cross-sectional household data from two rural regions of Bangladesh to test whether migration is a form of income diversification strategy that significantly influences the risk-taking behaviour of source farm households in agricultural activities. We account for heterogeneity of migration constraints differentiating between domestic (temporary and permanent) and international moving destinations. We find that richer and large-holder households are more likely to participate in costly high-return migration (i.e. international migration) and employ modern technologies, thereby achieving higher productivity. Poorer households, on the other hand, are not able to overcome entry costs of moving abroad and fall back on migration with low entry costs, and low returns (i.e. domestic migration), which does not help them to achieve production enhancements and may lock them into persistent poverty. We interpret our results as evidence that if migration is a profitable household activity, entry constraints may hinder the access to it and its effectiveness as income diversification strategy.