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Dynamic control of rural-urban migration

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  • Itoh, Ryo
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    Abstract

    This study investigates the optimal urbanization control of an underdeveloped economy by specifying a simple dynamic rural-urban model in which the urban sector bears both an intertemporal positive externality and a simultaneous negative externality. The dynamic optimization problem is solved for the political intervention of the central government in an intersectoral population distribution with taxes and subsidies. Our analysis provides the following results: (i) a big-push policy that leads an economy to a higher-income steady state with urbanization is not necessarily desirable if the government cannot borrow money at a sufficiently low interest rate; (ii) in order to sustain an appropriate urbanization speed, urbanization control policy should have a switch: the urban sector should be subsidized in order to accelerate rural-urban migration in early stages of development, and taxed to decelerate and eventually cease the migration in later stages.

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    File URL: http://www.sciencedirect.com/science/article/B6WMG-4WS9BH4-1/2/611c2db63be78b4682d8f204496bcf94
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Urban Economics.

    Volume (Year): 66 (2009)
    Issue (Month): 3 (November)
    Pages: 196-202

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    Handle: RePEc:eee:juecon:v:66:y:2009:i:3:p:196-202

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    Web page: http://www.elsevier.com/locate/inca/622905

    Related research

    Keywords: Rural-urban migration Optimal urbanization control Big-push Speed of urbanization;

    References

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    1. Iwaisako, Tatsuro, 2002. "Technology choice and patterns of growth in an overlapping generations model," Journal of Macroeconomics, Elsevier, vol. 24(2), pages 211-231, June.
    2. Jonathan Eaton & Zvi Eckstein, 1994. "Cities and Growth: Theory and Evidence from france and Japan," Boston University - Institute for Economic Development 36, Boston University, Institute for Economic Development.
    3. Henderson, J V, 1974. "The Sizes and Types of Cities," American Economic Review, American Economic Association, vol. 64(4), pages 640-56, September.
    4. Henderson, J Vernon, 1985. "The Tiebout Model: Bring Back the Entrepreneurs," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 248-64, April.
    5. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
    6. Bertinelli, Luisito & Black, Duncan, 2004. "Urbanization and growth," Journal of Urban Economics, Elsevier, vol. 56(1), pages 80-96, July.
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    Cited by:
    1. Sharma, Susan Sunila, 2011. "Determinants of carbon dioxide emissions: Empirical evidence from 69 countries," Applied Energy, Elsevier, vol. 88(1), pages 376-382, January.

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