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Migration and Pollution

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  • Raghbendra Jha
  • John Whalley

Abstract

We explore the links between migration of labour and location specific (urban) pollution, suggesting a sense in which pollution can be welfare improving. In a conventional Harris-Todaro model of urban-rural migration, individuals migrate so as to equate the expected urban wage (given a downward rigid real wage in the urban sector) to the real wage. Unemployment is endogenously determined. Interpreting unemployment as damage, urban pollution (damage denoted in units of labour) can also support the same equilibrium with the value of damage equal to the value of resources otherwise lost through unemployment. However, if the damage function implies an uninternalized externality (due to urban congestion, for instance), an internalization gain can be realized through the use of a Pigouvian tax (or instrument) that discourages migration. Thus if pollution is introduced into a Harris-Todaro model with no such features, environmental damage displaces unemployment to support a similar outcome. Internalizing the externality then yields a welfare gain. We characterize the optimal Pigouvian tax in such a case and show that it is, in general, non-zero. In this sense, then, pollution can be welfare improving perhaps suggesting an alternative view of congestion and other adverse environmental effects facing urban dwellers in the developing world.

Suggested Citation

  • Raghbendra Jha & John Whalley, 2003. "Migration and Pollution," Departmental Working Papers 2003-07, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2003-07
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    References listed on IDEAS

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    1. Richard Agesa, 2000. "The incentive for rural to urban migration: a re-examination of the Harris-Todaro model," Applied Economics Letters, Taylor & Francis Journals, vol. 7(2), pages 107-110.
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    4. Lisandro Abrego & John Whalley, 2002. "Adaptation, Internalization and Environmental Damage," University of Western Ontario, Departmental Research Report Series 20022, University of Western Ontario, Department of Economics.
    5. Partridge, Mark D. & Rickman, Dan S., 1997. "Has the wage curve nullified the Harris-Todaro model? Further US evidence," Economics Letters, Elsevier, vol. 54(3), pages 277-282, July.
    6. Gupta, Manash Ranjan, 1993. "Rural-urban migation, informal sector and development policies A theoretical analysis," Journal of Development Economics, Elsevier, vol. 41(1), pages 137-151, June.
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    Keywords

    Migration; Damage; Pollution; Unemployment;
    All these keywords.

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