Rural-to-urban migration, human capital, and agglomeration
Journal of Economic Behavior & Organization
Agglomeration economies, Public policies, Rural-to-urban migration, The externality effect of the average level of human capital
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.
Copyright © 2008 Elsevier B.V.
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Fan, C. S., & Stark, O. (2008). Rural-to-urban migration, human capital, and agglomeration. Journal of Economic Behavior & Organization, 68(1), 234-247. doi: 10.1016/j.jebo.2008.04.003