We model interhousehold transfers between nomadic livestock herders as the state-dependent consequence of individuals' strategic interdependence resulting from the existence of multiple, opposing externalities. A public good security externality among individuals sharing a social (e.g., ethnic) identity in a potentially hostile environment creates incentives to band together. Self-interested interhousehold wealth transfers from wealthier herders to poorer ones may emerge endogenously within a limited wealth space as a means to motivate accompanying migration by the recipient. The distributional reach and size of the transfer are limited, however, by a resource appropriation externality related to the use of common property grazing lands. When this effect dominates, it can induce transfers from households who want to relieve grazing pressures caused by others' herds. Our model augments the extant literature on transfers, and is perhaps more consistent with the limited available empirical evidence on heterogeneous and changing transfers - patterns among east African pastoralists. The core principles of our model possibly apply more broadly, for example to long-distance migrants or even among "foot soldiers" in street gangs.
Huysentruyt, Marieke; Barrett, Christopher B.; and McPeak, John G., "Understanding Declining Mobility and Interhousehold Transfers among East African Pastoralists" (2008). Economics - Faculty Scholarship. 71.
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