Upward mobility for poor, rural workers often involves migrating to cities, but sending money home can be costly and unreliable. Through an RCT, we introduced mobile banking to migrant-household pairs from rural Bangladesh. One year later, use of the digital financial technology had increased urban-to-rural remittances, decreased rural poverty, and improved conditions in the lean season. Eight years later, treated households had acquired 33 percent more productive assets by value. The treatment and control groups were using mobile money to comparable extents by then, and treatment effects on rural household consumption, income, poverty, and financial outcomes were no longer detectable.
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Poverty and Migration in the Digital Age: Experimental Evidence on Mobile Banking in Bangladesh
Published in the American Economic Journal: Applied Economics, 2021.
Rapid urbanization is reshaping economies and intensifying spatial inequalities. In Bangladesh, we experimentally introduced mobile banking to very poor rural households and family members who had migrated to the city, testing whether mobile technology can reduce inequality by modernizing traditional ways to transfer money. One year later, for active mobile banking users, urban-to-rural remit- tances increased by 26 percent of the baseline mean. Rural con- sumption increased by 7.5 percent, and extreme poverty fell. Rural households borrowed less, saved more, sent additional migrants, and consumed more in the lean season. Urban migrants experienced less poverty and saved more but bore costs, reporting worse health.