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Rural-to-Urban Migration, Human Capital, and Agglomeration

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  • Stark, Oded
  • Fan, C. Simon

Abstract

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.

Suggested Citation

  • Stark, Oded & Fan, C. Simon, 2007. "Rural-to-Urban Migration, Human Capital, and Agglomeration," Discussion Papers 7116, University of Bonn, Center for Development Research (ZEF).
    • Handle: RePEc:ags:ubzefd:7116
    DOI: 10.22004/ag.econ.7116
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    Cited by:

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    2. Zhan Xu & Qingbin Meng & Song Wang, 2022. "The effect of housing boom on firm leverage evidence from China," Review of Quantitative Finance and Accounting, Springer, vol. 58(3), pages 1215-1248, April.
    3. Thomas Vendryes, 2011. "Migration constraints and development: Hukou and capital accumulation in China," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00783794, HAL.
    4. Ioana Viasu, 2014. "Migrant Labor, Unemployment and Optimal Growth," Computational Methods in Social Sciences (CMSS), "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences, vol. 2(2), pages 30-38, December.
    5. San Yin Yin Tun, 2017. "The roles of migrants and social remittance in traditional festivals’ practices in Za Yet Pyin village, Rakhine State, Myanmar," Journal of Advances in Humanities and Social Sciences, Dr. Yi-Hsing Hsieh, vol. 3(4), pages 226-238.
    6. Gauri Sreekumar & Sabuj Kumar Mandal, 2024. "Impact of drought on out-migration among rural farm households in India: does participation in non-farm activities and access to irrigation make any difference?," Indian Economic Review, Springer, vol. 59(2), pages 525-558, December.
    7. Vendryes, Thomas, 2011. "Migration constraints and development: Hukou and capital accumulation in China," China Economic Review, Elsevier, vol. 22(4), pages 669-692.
    8. Dongmei Guo & Shuning Kong & Xin Li & Yiming Liu & Weizeng Sun, 2025. "Urbanization and subjective well-being of native urban residents: evidence from the “new-type urbanization pilot policy” in China," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 74(1), pages 1-27, March.
    9. Mulubrhan Amare & Lena Hohfeld, 2016. "Poverty Transition in Rural Vietnam: The Role of Migration and Remittances," Journal of Development Studies, Taylor & Francis Journals, vol. 52(10), pages 1463-1478, October.
    10. Driouchi, Ahmed & Kadiri, Molk, 2010. "Emigration of Skilled Labor under Risk Aversion: The Case of Medical Doctors from Middle Eastern and North African Economies," MPRA Paper 22810, University Library of Munich, Germany, revised 20 May 2010.
    11. Adolfo, Cristobal Campoamor, 2014. "The impact of China's hukou restrictions on the aggregate national saving," MPRA Paper 57983, University Library of Munich, Germany.
    12. Yu Jia & Yunqian Wang & Piao Li & Shuang Gao, 2024. "Economic Communication: The Influence of High-Speed Rail on Urban-Rural Income Inequality in China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 174(1), pages 47-73, August.
    13. Fu, Yuming & Gabriel, Stuart A., 2012. "Labor migration, human capital agglomeration and regional development in China," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 473-484.
    14. Paolo Ghinetti & Simone Moriconi, 2013. "The Wage Return to Graduate in Italian Small-town Universities," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2013(1), pages 39-53.
    15. Jamal Bouoiyour & Amal Miftah & Christophe Muller, 2017. "Maghreb Rural-Urban Migration: The Movement to Morocco’s Towns," Working Papers 1082, Economic Research Forum, revised 04 Oct 2017.
    16. Calin Arcalean & Gerhard Glomm & Ioana Cosmina Schiopu, 2019. "Urbanization, productivity differences and spatial frictions," CESifo Working Paper Series 7609, CESifo.

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    Keywords

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    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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