Death scares: How potential work-migrants infer mortality rates from migrant deaths

Abstract

I analyze the migration response to incidents of migrant deaths to understand how potential work migrants infer underlying mortality rates. In the context of migrant workers from Nepal to Malaysia and the Persian Gulf countries, I find that incidents of migrant deaths in district-destination cell lower migration outflows in subsequent months, but do not affect prices or job characteristics. Furthermore, the migration response is stronger when there have been streaks of migrant deaths in recent months. Learning about unobserved costs of migration through migrant deaths, primarily via learning mortality rate abroad, becomes an important part of migration decision in this context. I find that the observed migration response implies a large change in perceived mortality rate in response to a migrant death. Models of learning fallacies, such as the belief in the ‘law of small numbers’, better explain the observed responses than a standard model of rational Bayesian learning.