Voting with their feet? Access to infrastructure and migration in Nepal

Do migrants respond to differences in access to public goods and services in addition to income prospects of potential destinations?  This issue is important in developing countries where provision of basic public goods affects not only income prospects but also quality of life. And in these countries, provision of public goods tends to vary widely across areas.  In a Tiebout (1956) sorting model, such disparity in the provision of public goods such as roads, electricity, schools, hospitals, etc. should induce people to "vote with their feet" and to migrate to areas with better access to these infrastructures and services.

Using bilateral migration flow data from the 2010 population census of Nepal, in a recent working paper, Prem Sangraula, Yue Li and I provide evidence on the importance of public infrastructure and services in determining migration flows. The empirical specification corrects for the non-random selection of migrants. The results show that migrants prefer areas that are nearer to paved roads and have better access to electricity. Apart from electricity's impact on income and through income on migration, we find that migrants attach substantial amenity value to access to electricity. In other words, better access to electricity attracts migrants not only because it brightens their income prospects but also because it offers better quality of life to them.

Our main findings have important implications for the placement and evaluation of basic public infrastructure and services. While geographical coverage of these public goods should be universal, budget constraints often force governments to prioritize their roll out. Our empirical results suggest that governments can perhaps give more weight to cost considerations in prioritizing the roll out. Migration in response to provision of public goods implies spill-overs from areas which received investment in public goods to non-treatment areas. Such spill-overs can in turn lead to substantial downward bias in the estimates of returns to public investment when its effect on migration is ignored.