modern seeds are a relatively spread, divisible and profitable technology, but well-known as
being more susceptible to yield variability than traditional varieties1.
The bulk of empirical contributions on the impact of migration on sending households are
mostly focused on the role of remittances in improving source household’s consumption or
income. Given the typical non-separable nature of consumption and production household
decisions in rural settings with incomplete markets, relatively few empirical works have
shown the potential impact of migration on household production choices at origin. Among
these, Rozelle et al. (1999) and Lucas (1987) have shown the growth potential of migration in
rural contexts of capital market imperfections, whereby remittances accumulated abroad allow
households to improve their agricultural productivity and to accumulate productive assets.
Differently from this part of evidence on the NELM hypothesis, though, this paper is
particularly concerned with the role of entry constraints in undertaking a remunerative and
risk-reducing migration strategy. Indeed, moving from one place to another is not without
costs for the whole household; namely, fixed initial financial costs, such as travel, recruiting
agency and accommodation costs, and opportunity costs to migrate, in terms of forgone
working capital, skills, yield, and income2, ought to be sustained. In general, if access to
profitable activities requires some initial cash outlay or start-up costs (to be paid in advance to
investment returns), then multiple equilibria are likely to arise and poverty traps phenomena
may be observed3.
In this paper we look at heterogeneity of migration constraints in Bangladeshi farm
households, differentiating between temporary, permanent and international moving.
Information on alternative outside destinations included in our data-set show that the latter
three typologies of migration have sharply different net-returns, in terms of initial costs and
remittances sent back home. Therefore, although they all represent activity-diversification
strategies improving farm household risk-management, not all migration forms may induce
risk-taking behaviour in agricultural production in source households. Moreover, given the
1 Causes of instability are identified mainly in genetic vulnerability and increased covariation across regions. In
an earlier work of the author it has been shown that adoption of HYVs of rice has a positive impact on household
wellbeing (see Mendola, 2003).
2 At a macro level, Faini and Venturini (1994) have argued that the willingness to migrate is constrained by
inadequate human and physical capital and, for a given wage differential, income per capita increases, in poor
countries, release individual constraints to migrate and favour outflows. At a given “threshold”, income per
capita stops being a pushing facto and becomes a restraint factor, when people have achieved enough well-being
to prefer to stay home rather than to leave. They test this hypothesis to explain the Italian migration hump of the
beginning of the 90s obtaining very satisfying results.
3 There are several theoretical and empirical contributions on the consequences of imperfect credit market and
initial constraints in terms of risk-management capacity, low-risk investment by poorer farmers, ability to
overcome entry barriers into high-return activities for better-resourced households, poverty traps (Eswaran and
Kotwan , 1990, Banerjee and Newman 1993; Dercon 1996, 1998, Morduch, 1995)