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Social influence, agent heterogeneity and the emergence of the urban informal sector

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  • García-Díaz, César
  • Moreno-Monroy, Ana I.

Abstract

We develop an agent-based computational model in which the urban informal sector acts as a buffer where rural migrants can earn some income while queuing for higher paying modern-sector jobs. In the model, the informal sector emerges as a result of rural–urban migration decisions of heterogeneous agents subject to social influence in the form of neighboring effects of varying strengths. Besides using a multinomial logit choice model that allows for agent idiosyncrasy, explicit agent heterogeneity is introduced in the form of socio-demographic characteristics preferred by modern-sector employers. We find that different combinations of the strength of social influence and the socio-economic composition of the workforce lead to very different urbanization and urban informal sector shares. In particular, moderate levels of social influence and a large proportion of rural inhabitants with preferred socio-demographic characteristics are conducive to a higher urbanization rate and a larger informal sector.

Suggested Citation

  • García-Díaz, César & Moreno-Monroy, Ana I., 2012. "Social influence, agent heterogeneity and the emergence of the urban informal sector," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(4), pages 1563-1574.
  • Handle: RePEc:eee:phsmap:v:391:y:2012:i:4:p:1563-1574
    DOI: 10.1016/j.physa.2011.08.057
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    References listed on IDEAS

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    Cited by:

    1. Zhao, Jingjing & Chai, Lihe, 2015. "A novel approach for urbanization level evaluation based on information entropy principle: A case of Beijing," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 430(C), pages 114-125.
    2. Imelda Flores Vazquez, 2014. "Equilibrium unemployment in the presence of different skill levels in two different regions: Mexico versus Egypt," Letters in Spatial and Resource Sciences, Springer, vol. 7(3), pages 121-131, October.
    3. Anna Klabunde & Frans Willekens, 2016. "Decision-Making in Agent-Based Models of Migration: State of the Art and Challenges," European Journal of Population, Springer;European Association for Population Studies, vol. 32(1), pages 73-97, February.

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