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Rural-to-urban migration, human capital, and agglomeration

  • Fan, C. Simon
  • Stark, Oded

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.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 68 (2008)
Issue (Month): 1 (October)
Pages: 234-247

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Handle: RePEc:eee:jeborg:v:68:y:2008:i:1:p:234-247
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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