Income Risk, Insurance, and Rural-Urban Structural Change
I document differences in labor income risk across rural and urban households in China and South Africa. Rural households experience large but more transitory shocks, while urban house-holds experience smaller but more persistent income shocks. I combine these estimates with consumption level data to discipline an incomplete market model with endogenous forward-looking migration and informal insurance. Differences in the income process are important to understand both the low passthrough of income shocks to consumption commonly measured in rural environments, and equilibrium selection into migration, which together shape differences in volatility and mean income of rural vs. urban households. I use the model to quantify the impact of differences in income risk and insurance on rural-urban wage gaps, migration, and aggregate productivity.
Date: 3 June 2025, 16:00
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A
Speaker: Florian Trouvain (University of Oxford)
Organising department: Department of Economics
Part of: Applied Microeconomics Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Edward Clark