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

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Author Info
Thomas Krichel ()
Paul Levine ()

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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.

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File URL: http://www.econ.surrey.ac.uk/discussion_papers/RePEc/sur/surrec/surrec9702.pdf
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Publisher Info
Paper provided by Department of Economics, University of Surrey in its series Department of Economics Discussion Papers with number 9702.

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Date of creation: Feb 1997
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Handle: RePEc:sur:surrec:9702

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Find related papers by JEL classification:
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. M. Burda & M. Funke, . "Wages and Structural Adjustment in the New German States aareprints," Sonderforschungsbereich 373 1996-99, Humboldt Universitaet Berlin.
  2. Michael Burda & Michael Funke, 1992. "Trade Unions, Wages and Structural Adjustment in the New German States," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich.
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  1. Sari Pekkala, 2003. "What Draws People to Urban Growth Centers: Jobs vs. Pay?," Discussion Papers 310, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  2. Stephen Drinkwater & Paul Levine & Emanuela Lotti & Joseph Pearlman, 2003. "The Economic Impact of Migration: A Survey," Department of Economics Discussion Papers 0103, Department of Economics, University of Surrey. [Downloadable!]
  3. Kul B. Bhatia, 2002. "Specific and mobile capital, migration and unemployment in a Harris-Todaro model," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 11(2), pages 207-222, June. [Downloadable!] (restricted)
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