Since the introduction of the Lewis (1954), Sjaastad (1962), and Harris and Todaro (1970) models, it is well acknowledged that migration, particularly rural to urban migration, is key to the process of economic development and instrumental to escape poverty. Economic theory proposes migration as a response to a partial disequilibrium in labor markets: differences in individual earnings matter and are a driver of migration (Smith (1776), Hicks (1932), Harris and Todaro (1970)). A different and more recent strand of literature, known as the “new economics of migration” (Stark and Bloom, 1985), looks at migration as a household decision to diversify its income portfolio, as “a decision to try to hedge against risk and to ease liquidity constraints” (Bodvarsson et al., 2015). Natural disasters and crop prices disturbances might make complete specialization in agriculture a risky choice. In the absence of insurance markets, one way to insure income is to diversify across a number of different income sources (Stark and Levhari, 1982). Migration can be a response and can occur even in case the mean and variance of income are identical in cities and rural areas.

More recent evidence has shown that migrant networks might help reduce the cost of migration. The presence of people at destination, who can assist, makes the movement more likely to occur. Such networks are naturally based on country of origin, which translates into language networks, in the case of international migration, and they might be interpreted as religious, ethnic, and cultural networks in the case of domestic migration. Luke and Munshi (2006), for example, have shown how ethnic networks can be used to reduce employment uncertainty and make receipts of future remittances more stable and secure via migrants’ marriages at destination.

De Haan (2007) highlights a lack of studies on the effects of migration on development, inequality, and poverty despite increasing population mobility. Albeit quantitative studies have often been hindered by lack of adequate data to characterize the migration process (De Brauw et al., 2014) and by the inherent impossibility of observing an individual in the two states (migrant and nonmigrant), a number of studies have supported the positive impact of migration on living conditions. Lall et al. (2006) conclude that migration can be a beneficial phenomenon and migration restrictions should be avoided. Other recent studies, such as Lokshin et al. (2010), find that workrelated migration, both international and domestic, has a positive effect on welfare and reduces poverty in Nepal. Beegle et al. (2011) use a 13-year panel survey in Tanzania and show that migration between 1991 and 2004 increased consumption growth by 36 percentage points.

Coming to the impact of migration on the welfare of Ghanaian households, a series of analyses published by the Ghana Statistical Service in 1995 and based on the 1991 Ghana Migration Survey find that migration induces a decline in household labor supply that is however compensated by additional effort of household members left behind, indicating no loss of output in the short run in over half of the interviewed households and an expectation of no drop in the long run (Tutu, 1995). These studies also point to remittances as an important element in origin rural communities to support the welfare of household members who stayed and to narrow the welfare difference between rural and urban communities (Asante, 1995).

Litchfield and Waddington (2003) estimate a higher consumption level among migrant households, although the difference decreased between 1991/92 and 1998/99, and the finding does not hold when considering non-monetary measures of welfare and the probability of being poor. Tsegai (2007) and Boakye-Yiadom (2008), unlike Litchfield and Waddington (2003), account for 3