Information (5th Policy) Baseler - Report Cards, Bhatiya - Gov program on perceived location/salary Flashcards
What do people make decisions to migrate based on, and what does this require?
Perceived costs and benefits; thus requiring information!
McKenzie - finds prospective migrants underestimate potential income in New Zealand. Why? (3)
Not thinking about it
Bias sources
Aggregation failures (stubborn prices, excess weight on outliers e.g going off what 1 person has said the wage is low)
Baseler : what did he look at?
Looked at rural perceptions of big city wages in Kenya. (Considered nominal and price-deflated income)
Found perceived income is lower than actual for both nominal and price deflated income i.e underestimating wages! (Opposite of Bhatiya where overestimate!)
Why are they underestimating?
They just dont know migrant incomes.
Do know their rural villager income tho! (Parent report of income similar to actual worker reported income)
So what was the treatment in Baseler
Report card with information of urban labour markets
e.g earning ratios, migrant employment, food prices etc.
Findings (3)
Intention to migrate increased
Actual migration increased
Earnings increased
(So report cards info was effective in correcting perceptions of urban area benefits!)
Bhatiya et al (our lecturer)
Impact of government training and placement program on migration decision.
3 problems preventing migration the program corrected
B) if people still wouldn’t migrate, what is this down to?
Higher skill requirements in urban jobs - alleviated
Credit or insurance constraints preventing migration - alleviated
Lack of info - in principle alleviated
(With these alleviated, if people are still not migrating it is due to non-monetary costs of migration!)
Research design - what 2 data did they collect
Collect labour market beliefs of the rural young people of:
Location - their perceived probability of getting a job in/out state
Perceived salary e.g how many will get a job between 6000Rs to 8000Rs
Findings for locational belief pre&post intervention (Bhatiya)
Beliefs pre intervention were similar, both think more likely to get a job IN the state (closer to home) than OUT.
Post intervention - treatment group with program more accurate beliefs; believe they will get a job outside of the state rather than inside.
Findings on salary pre-post intervention
Pre intervention - similar beliefs, expect too high salaries
Post - treatment expect lower inside state wages, and higher wages from outside state
So what happened to migration
Migration fell (since less attractive once adapting beliefs to reality!) Stop overestimating salaries and expected job closer to home (inside state!)
What does this imply for non-monetary migration costs, and why?
Large! Revealed preference reveal rural job seekers need to be paid 50% more to work outside their home state
