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Search, Migration, and Urban Land Use: The Case of Transportation Policies

  • Zenou, Yves

We develop a search-matching model with rural-urban migration and an explicit land market. Wages, job creation, urban housing prices are endogenous and we characterize the steady-state equilibrium. We then consider three different policies: a transportation policy that improves the public transport system in the city, an entry-cost policy that encourages investment in the city and a restricting-migration policy that imposes some costs on migrants. We show that all these policies can increase urban employment but the transportation policy has much more drastic effects. This is because a decrease in commuting costs has both a direct positive effect on land rents, which discourages migrants to move to the city, and a direct negative effect on urban wages, which reduces job creation and thus migration. When these two effects are combined with search frictions, the interactions between the land and the labor markets have amplifying positive effects on urban employment. Thus, improving the transport infrastructure in cities can increase urban employment despite the induced migration from rural areas.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8110.

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Date of creation: Nov 2010
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Handle: RePEc:cpr:ceprdp:8110
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  7. Wahba, Jackline & Zenou, Yves, 2004. "Density, Social Networks and Job Search Methods: Theory and Application to Egypt," Working Paper Series 629, Research Institute of Industrial Economics.
  8. Maloney, William, 2003. "Informality revisited," Policy Research Working Paper Series 2965, The World Bank.
  9. van Ommeren, Jos & Rietveld, Piet & Nijkamp, Peter, 1999. "Job Moving, Residential Moving, and Commuting: A Search Perspective," Journal of Urban Economics, Elsevier, vol. 46(2), pages 230-253, September.
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  13. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
  14. Timothy Besley & Robin Burgess, 2002. "Can Labour Regulation Hinder Economic Performance? Evidence from India," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 33, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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  17. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
  18. Zenou, Yves, 2010. "Housing Policies in China: Issues and Options," Working Paper Series 824, Research Institute of Industrial Economics.
  19. Bosch, Mariano & Goni, Edwin & Maloney, William F., 2007. "The Determinants of Rising Informality in Brazil: Evidence from Gross Worker Flows," IZA Discussion Papers 2970, Institute for the Study of Labor (IZA).
  20. Wasmer, Etienne & Zenou, Yves, 2004. "Equilibrium Search Unemployment with Explicit Spatial Frictions," Working Paper Series 615, Research Institute of Industrial Economics.
  21. Bosch, Mariano & Maloney, William, 2008. "Cyclical movements in unemployment and informality in developing countries," Policy Research Working Paper Series 4648, The World Bank.
  22. Matias Busso & Jesse Gregory & Patrick Kline, 2011. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," Working Papers 11-07, Center for Economic Studies, U.S. Census Bureau.
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  24. Wasmer, Etienne & Zenou, Yves, 2002. "Does City Structure Affect Job Search and Welfare?," Journal of Urban Economics, Elsevier, vol. 51(3), pages 515-541, May.
  25. Zenou, Yves, 2008. "Job search and mobility in developing countries. Theory and policy implications," Journal of Development Economics, Elsevier, vol. 86(2), pages 336-355, June.
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  35. Yasuhiro Sato, 2004. "Migration, Frictional Unemployment, and Welfare-Improving Labor Policies," Journal of Regional Science, Wiley Blackwell, vol. 44(4), pages 773-793.
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