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

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  • Thomas Krichel

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  • 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.

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File URL: http://www.fahs.surrey.ac.uk/economics/discussion_papers/archive/surrec9702.pdf
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Bibliographic Info

Paper provided by School of Economics, University of Surrey in its series School 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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  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. Maureen Kilkenny, 2010. "Urban/Regional Economics And Rural Development," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 449-470.
  2. 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.
  3. Sabates, Ricardo, 2000. "Job Search and Migration in Peru," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 30(2).
  4. 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.
  5. Sari Pekkala, 2003. "What Draws People to Urban Growth Centers: Jobs vs. Pay?," Discussion Papers 310, Government Institute for Economic Research Finland (VATT).

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