Network Size and Temporary Migration

In this study, I examine the impact of network size on temporary migration. The network size reflects the extent of informal risk-sharing options available to rural households. Temporary migration is another form of self-insurance in a rural economy. I particularly focus on how the impact of network size on temporary migration varies depending on the endowment of the network and show that the channel is via credit constraints for the low-endowed network. I use the Indian Human Development Survey 2011-12 data to construct a measure of network size based on the caste of the households. To support the correlation results, I use historical caste-wise population shares from the 1961 Census as an instrument of network size and low permanent migration regions. I find that an increase in network size leads to a decrease in temporary migration in highly endowed upper-caste networks and an increase in temporary migration in low-endowed lower-caste networks. Furthermore, I investigate the economic mechanisms using exogenous variation in network income due to negative rainfall shocks. I show that an increase in network size reduces the credit constraints of low-endowment lower-caste households via the income of the network