Internal Migration, Structural Change, and Economic Growth

Structural change or the change in the sectoral composition of output is a common component in the growth process in developing economies. Not recognized in previous models of this process is the households' choice of urban - rural residency which not only alters the demand for regionally specific goods (e.g., housing, education, health), and hence the cost of living, but also the stock of rural - urban labor and the rate of growth and structural change. We investigate the relationship between GDP growth, regional imbalances, and rural-urban migration using a neoclassical multi-region-sector growth model. The household decision for migration is dependent on the cost-of living differentials implied by the relative changes in regional home goods prices across regions as capital deepening occurs and the capital stock within each region evolves. Results show that allowing for residency choice provides a much richer explanation of the forces of structural change and growth.


Issue Date:
2015
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/212690
Total Pages:
38
JEL Codes:
O41; R13; R23; C61




 Record created 2017-04-01, last modified 2017-08-28

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