Temporary Migration and Risk-Sharing
A graph-theoretic model of how network structure drives migration and risk-sharing under correlated income shocks.
Final Paper for ECON 291: Social and Economic Networks, Winter 2025
Abstract
We introduce a novel graph-theoretic model of risk-sharing and temporary migration in social networks with the presence of correlated income shocks. We characterize the conditions for incentive-compatible migration and risk-sharing arrangements, identifying how network structure directly influences agent decisions. Specifically, we prove that for unit-capacity networks, the set of households choosing not to migrate in the minimal stable arrangement coincides precisely with the network’s k-core, where k depends explicitly on the severity of the correlated shocks and deterioration of relationships due to migration. We complement our theoretical results with numerical simulations on an Erdős–Rényi graph, illustrating how lesser-connected households are more likely to migrate, particularly as the shock becomes more severe.
Authors
- Lyle Goodyear
- Annika Younge