Rural-to-Urban Migration, Human Capital, and Agglomeration

A new general-equilibrium model that links together rural-to-urban migration, the externality effect of the average level of human capital, and agglomeration economies shows that in developing countries, unrestricted rural-to-urban migration reduces the average income of both rural and urban dwellers in equilibrium. Various measures aimed at curtailing rural-to-urban migration by unskilled workers can lead to a Pareto improvement for both the urban and rural dwellers. In addition, the government can raise social welfare by reducing the migration of skilled workers to the city. Moreover, without a restriction on rural-to-urban migration, a government’s efforts to increase educational expenditure and thereby the number of skilled workers may not increase wage rates in the rural or urban areas.


Issue Date:
2007
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/7116
Total Pages:
25
Series Statement:
ZEF – Discussion Papers on Development Policy
118




 Record created 2017-04-01, last modified 2017-08-23

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