Internal Labor Migration as a Shock Coping Strategy: Evidence from a Typhoon †

American Economic Journal: Applied Economics 2016, 8(2): 123­153 http://dx.doi.org/10.1257/app.20140362 By André Gröger and Yanos Zylberberg* We analyze how internal labor migration facilitates shock coping in rural economies. Employing high-precision satellite data, we identify objective variations in the inundations generated by a catastrophic typhoon in Vietnam and match them with household panel data before and after the shock. We find that, following a massive drop in income, households cope mainly through labor migration to urban areas. Households with settled migrants ex ante receive more remittances. Nonmigrant households react by sending new members away who then remit similar amounts than established migrants. This mechanism is most effective with long-distance migration, while local networks fail to provide insurance. (JEL J61, O15, P25, P36, Q54, R23) "The prudent embark when the sea is calm--the rash when it's stormy." --New Zealand Proverb e study the impact of a disastrous typhoon on poor rural households in Central Vietnam and the role that internal labor migration--both before and after this shock--plays for recovery.1 Following a large adverse productivity shock, we identify internal remittances from long-distance labor migrants as the main shock coping strategy. Households receive remittances from both ex ante established migrant networks and new members sent away ex post. While most existing evidence focuses * Gröger: Goethe University Frankfurt, Theodor-W.-Adorno-Platz 4, 60629 Frankfurt (e-mail: agroeger@ wiwi.uni-frankfurt.de); Zylberberg: University of Bristol, 8 Woodland Road, Bristol, BS8 1TN (e-mail: yanos. zylberberg@bristol.ac.uk). We are grateful to Bob Baulch, Martina Björkman Nyqvist, Guido Friebel, Corrado Giulietti, Dany Jaimovich, Stephan Klasen, Rainer Klump, Steffen Lohmann, Rocco Macchiavello, Teresa Molina Millán, Dilip Mookherjee, Hillel Rapoport, Isabelle Sin, Steven...