August 2015

IZA DP No. 9283: Short-term Migration and Intergenerational Persistence of Industry in Rural India

One of the well-known barriers to development is persistence of disadvantage among communities. The lack of occupational and therefore upward social mobility continues to restrain households from achieving socially desirable outcomes. This paper studies the effect of short-term internal migration experience on the intergenerational persistence of industry upon a migrant's return to native place. We develop an occupational choice model of a return migrant to study the relationship between the migrant's savings, skill or any other productive asset accumulation during migration and the decision to work upon return, in the industry where his/her father is employed. Using data from a nationally representative sample survey, we find that short-term migration by males reduces the probability of intergenerational persistence by 20% in rural India. Migration to urban areas, work experience in a different industry and higher frequency of migration reduce the return migrant's chance of being employed in the industry where his father is employed. The results suggest that skill formation during migration can play a key role in reducing labour market inequality by weakening the strength of intergenerational transmission of disadvantages.