Seasonal Migration with Gift-giving and Gift-exchanges: Lessons from a Field Study of Rural-urban Migration in Bangladesh

In vast markets of developing economies, especially in South Asia, both seasonal rural migrants and threatened urban workers constitute a bulk of the new class of working poor and are truly marginal in terms of their socio-economic status. We argue that gift-giving and gift exchanges in labour markets can perpetuate both rural and urban poverty among the working poor. In the context of working poverty, we intend to make several contributions: first, we develop an interactive model with finite groups of (rural) workers and an employment agent to formalise an overtly simple model of one-sided gift-giving and test its predictions using micro-data collected from sample surveys in Bangladesh. The second contribution is to empirically assess the role of gift-giving in the decision to temporarily migrate from rural to urban labour markets. Thirdly, we intuit a new model of gift-exchanges and develop a new test based on the observable variables of the labour market in developing nations to identify if workers and their employers/agents form any long-term relationship involving gift-exchanges. We establish from the micro data that the long-term relationship of gift exchanges can create and perpetuate working poverty. Finally, the paper makes an important contribution to the field of rural-urban the migration by endogenising the relocation cost of the standard migration theory in order to explain how the equilibrium relocation cost can propel seasonal migration.