Economics & Finance / Economic Theory / Development Economics
Why India's Rural Job Scheme Cuts Welfare by 9.9%? The Shocking Truth About Migration & Risk Sharing
Temporary Migration and Endogenous Risk Sharing in Village India
In this eye-opening video, we dive into a groundbreaking 2016 study by Melanie Morten on temporary migration and endogenous risk sharing in Indian villages. The research reveals a counterintuitive finding: making migration easier can actually reduce overall welfare by 9.9% when it undermines informal village risk-sharing networks. We break down the five key empirical facts from ICRISAT data (2001-2004), showing how migration acts as self-insurance but crowds out community support. The most shocking part? India's NREGA job guarantee program, designed to help the poor, may have its benefits slashed by 55-70% due to these hidden interactions. If you've ever wondered why well-intentioned policies can backfire, this video explains the math behind the paradox. Melanie Morten, an economist at the University of Chicago, presents a model that changes how we think about rural development.
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