Shocks and labour mobility across rural–urban destinations: Evidence from Ethiopia

Motivation Labour mobility is an important driver of economic development in low‐ and middle‐income countries. It is driven by pull factors that increase labour productivity in destination areas and improve the expected returns to migration, as well as by push factors such as shocks and risks in areas of origin. Purpose This study empirically examines the role of shocks in shaping rural labour mobility decisions, focusing on participation and destination choices. Recognizing that rural households in low‐ and middle‐income countries are often exposed to multiple and frequent shocks, we identify more than 30 types of shocks across six domains—COVID‐19, production, marketing, institutional, financial, and personal—and analyse the effects of overall and domain‐specific shocks on labour mobility outcomes. Moreover, we distinguish between different labour mobility destinations and examine migration to rural villages, secondary towns, and cities. Approach and methods Using data from a three‐round household survey of 806 observations, we apply cross‐sectional probit, trivariate probit, and conditional mixed process regression models, complemented with an IV approach. Findings Results show that exposure to shocks is associated with a higher likelihood of labour mobility, with resource‐poor households more likely to migrate to rural destinations. The estimated effects vary by shock type and mobility destination and suggest that production shocks promote rural–rural migration but deter urban migration, while personal and financial shocks stimulate movements to urban or secondary‐town destinations. Policy implications These patterns highlight the differentiated role of migration as a risk‐coping strategy and underscore the need for policies that strengthen production resilience and promote financial inclusion to help households cope with shocks and make more effective decisions around labour mobility.