Labor markets in developing countries are characterized by large spatial differences in earnings. While such spatial wage gaps could be partly due to differences in average returns to labor, they can also be attributed to credit and insurance market failures, as well as asymmetric information with respect to potential employment and wages. Mobile phone technology could potentially alleviate some of these market failures, especially in countries with little access to other public goods.
Evidence suggests that there are some heterogeneous impacts of the program, with a higher probability of wealthier households engaging in migration. These effects do not appear to be driven by differences in households’ observable characteristics or differential effects of drought during the survey period. Rather we posit that they are largely explained by the effectiveness of mobile phones as a means to search for labor market information and reduce insurance market failures. These results suggest that simple and cheap information technology can be harnessed to affect labor mobility among rural populations.