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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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    1. Burda, Michael C & Funke, Michael, 1992. "Trade Unions, Wages and Structural Adjustment in the New German States," CEPR Discussion Papers 652, C.E.P.R. Discussion Papers.
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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. Tadashi MORITA & Yukiko SAWADA & Kazuhiro YAMAMOTO, 2016. "Subsidy Competition, Imperfect Labor Market, and Endogenous Entry of Firms," Discussion papers 16096, Research Institute of Economy, Trade and Industry (RIETI).
    5. 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.
    6. Maureen Kilkenny, 2010. "Urban/Regional Economics And Rural Development," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 449-470, February.
    7. Pekkala, Sari, 2003. "What Draws People to Urban Growth Centers: Jobs vs. Pay?," Discussion Papers 310, VATT Institute for Economic Research.
    8. 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.
    9. 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.
    10. 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.
    11. 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.

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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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