Political Institutions, Public Goods, and Migration

Abstract

Institutions play a crucial role in shaping economic growth, not only through governance and policy but also by influencing migration patterns, which serve as a key mechanism for economic mobility and structural transformation. The role of institutions in shaping economic growth has been well-documented, but their effect on migration remains relatively under-explored. This paper looks at the role that proximity to local political institutions plays in generating changes in rural-rural and rural-urban migration, focusing on the causes and consequences of this phenomenon. Using a 1992 reform in India that decentralized power to local village councils, I look at how the introduction of these councils, and the degree of independence of these villages, impacted migration patterns both within rural areas, and towards urban areas. I find that villages with an independent political unit have higher population growth, and using a novel aggregate RDD methodology, I show that districts with a higher share of independent village councils also have higher degrees of urban migration and lower rates of long-term rural migration. Finally, I provide evidence that this is likely driven by independent villages having marginally differential economic activity and a greater provision of infrastructure-related public goods.