Research
This paper highlights the importance of distinguishing between temporary and permanent migration when assessing the impact of economic shocks and the welfare consequences of public policies. To this end, I develop a spatial general equilibrium trade model that allows for both types of migration between locations. Applying the model to India, I find that temporary migration contributes 1.5 times more to average welfare and three times more to the welfare of the poorest 10% of districts, compared to permanent migration in the baseline economy. Furthermore, temporary migration plays a key role in reallocating labor in response to local economic shocks, generating significantly larger gains in both productivity and welfare relative to permanent migration. Finally, the model accounting for both forms of migration finds that spatial redistributive policies improve average welfare, whereas models limited to permanent migration predict welfare losses under the same policies. These findings underscore the importance of considering temporary migration when studying the transmission of local shocks and the effects of spatial redistribution.