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The Welfare Economics of Rural to Urban Migration: The Harris-Todaro Model Revisited

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  • Thomas Krichel
  • Paul Levine

Abstract

The Harris-Todaro model of rural to urban migration is extended to include urban agglomeration effects, some urban real wage flexibility and a government budget constraint. Without employment subsidies, laissez-faire migration is excessive unless real wage flexibility and agglomeration effects are high. Laissez-faire migration is too low compared with the first best outcome supported by a subsidies, if its financing involves no costs. Simulations suggest that such a program would imply a substantial increase in taxation. If, as seems likely, an increase of this magnitude involves economic costs, then the optimal outcome falls well short of first best.

Suggested Citation

  • Thomas Krichel & Paul Levine, 1997. "The Welfare Economics of Rural to Urban Migration: The Harris-Todaro Model Revisited," School of Economics Discussion Papers 9702, School of Economics, University of Surrey.
    • Handle: RePEc:sur:surrec:9702
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    References listed on IDEAS

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    Cited by:

    1. Komei Sasaki & Ismail Issah & Tariq Khan, 2004. "Do Migrants React to Infrastructure Difference between Urban and Rural Areas?:Development and Application of an Extended Harris-Todaro Model," ERSA conference papers ersa04p26, European Regional Science Association.
    2. Clemente, Jesus & Pueyo, Fernando & Sanz, Fernando, 2008. "A migration model with congestion costs: Does the size of government matter," Economic Modelling, Elsevier, vol. 25(2), pages 300-311, March.
    3. Pi Jiancai & Zhou Yu, 2015. "Rural Property Rights, Migration, and Welfare in Developing Countries," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 997-1029, July.
    4. MORITA Tadashi & SAWADA Yukiko & YAMAMOTO Kazuhiro, 2016. "Subsidy Competition, Imperfect Labor Market, and Endogenous Entry of Firms," Discussion papers 16096, Research Institute of Economy, Trade and Industry (RIETI).
    5. Stephen Drinkwater & Paul Levine & Emanuela Lotti & Joseph Pearlman, 2003. "The Economic Impact of Migration: A Survey," School of Economics Discussion Papers 0103, School of Economics, University of Surrey.
    6. Chul-In Lee, 2015. "Agglomeration, search frictions and growth of cities in developing economies," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 421-451, December.
    7. Jiancai Pi & Yu Zhou, 2015. "The impacts of corruption on wage inequality and rural–urban migration in developing countries," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 753-768, May.
    8. Roberto A. De Santis, 2003. "The Impact of a Customs Union with the European Union on Internal Migration in Turkey," Journal of Regional Science, Wiley Blackwell, vol. 43(2), pages 349-372, May.
    9. Maureen Kilkenny, 2010. "Urban/Regional Economics And Rural Development," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 449-470, February.
    10. Pekkala, Sari, 2003. "What Draws People to Urban Growth Centers: Jobs vs. Pay?," Discussion Papers 310, VATT Institute for Economic Research.
    11. Sabates, Ricardo, 2000. "Job Search and Migration in Peru," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 30(2), pages 1-25.

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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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