and ethnicities.<sup>12</sup> Immigrant networks are an important factor in the location choices of prospective migrants as networks can facilitate settling down, adaptation to a new geographical environment, job search process. If destination district � has historically hosted a large share of immigrants from origin district �, we expect individuals from district � who decided to migrate to move to district � because of the large share of immigrants coming from the same origin district already residing therein. Therefore, the historical immigration rates gives variation in the number of immigrants in destination districts that is presumably exogenous to current consumption levels. The identifying assumption is that the historical distribution of immigrants across districts is likely to be uncorrelated with consumption patterns of households in the same districts about 6 to 20 years later, depending on the time restrictions we impose on the stock of migrants that defines our immigration variable.<sup>13</sup> Since the identification of the causal effect of migration and consumption relies on this assumption, we consider potential threats to its validity.

One potential threat is that historical inequality and poverty levels that contributed to determine historical immigration rates also affect current levels of consumption due to the inter-generational transmission of poverty. In order to rule out this possibility, we control for a set of historical variables from the 1984 Census that are meant to proxy the historical inequality and poverty levels. The controls include the share of the population aged 6 and above with no schooling and the share of the employed population aged 10 and above engaged in agriculture.

Another threat to the validity of our instrument is that the historically high immigration rates triggered a more rapid development process in high-immigration districts, and this in turn caused changes in the distribution of income and ultimately consumption that are still observed today. Given the lack of information about historical inequality indicators, we include the Gini index of years of schooling among the population aged 6 and above and the average number of years of schooling of the population aged 6 and above, where education aims at capturing individuals' earnings potential.

As argued by McKenzie and Rapoport (2011), historical district level migration network can have a direct impact on current consumption levels, for example due to spill-over effects that persists over time. It is likely that such migration effects on consumption are larger if a household is a migrant household than if someone in the district migrated in the past. In other words, we expect the direct impact of the district network to be second order on the consumption level.

# 3.2 Estimation Techniques

> 12 The Akan, Mole- Dagbani, Ewe and Ga-Dangme are the four main ethnicities that together account for almost 90 percent of the population. Albeit all regions have a considerable number of “ _people considered to be ‘strangers’ in their region, there is a rough coincidence of ethnicity and administrative regions in Ghana”_ (Langer, 2009). For example, the Akans, the largest ethnic group, are the majority of the population in five regions (Western, Central, Eastern, Ashanti, and Brong-Ahafo. The Mole-Dagbanis, the second largest ethnic group, are mainly found in the northern regions.

> 13 We consider the impact of migration on household welfare by defining three stocks of migrants. The first includes all household heads who migrated between 1990 and 2011 (the year before the survey), between 2000 and 2011, and between 2005 and 2011.

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