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Migration, Policy and Welfare in the Context of Developing Economies : A Simple Extended Family Approach

  • S.M. Turab Hussain

    (LUMS)

After giving an overview of the state of migration policy in developing countries with special reference to Pakistan this paper essentially revisits the issue of policy and its effect on rural to urban migration under an extended family theoretical framework. This specific approach is motivated by empirical literature on migration in the context of developing countries which suggests the emergence of spatially separated but economically linked rural and urban households - expanded or extended families. The extended family in this paper consists of two households, the rural-origin and its urban-migrant offshoot. The migrant after leaving the countryside joins relatives in the city who through the assumption of income sharing within households sustain the migrant in case of unemployment. The economic tie linking the two households is remittances flowing from the migrants to the family members left behind. All decisions, migration and remittance, are based on altruism rather then self-interest. Thus in the model both migration and remittances are endogenously determined. This extended family framework is then employed to analyze the effect of the standard policy prescriptions, i.e., urban employment subsidy and a rural income subsidy on migration and urban employment. Also, the welfare effect of a subsidy transfer from urban to rural sector is analyzed. The results, especially in the case of the rural subsidy provision, are qualitatively different from those in the standard Harris-Todaro type literature on migration suggesting the sensitivity of predicted policy effects on the type of methodology employed.

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Paper provided by East Asian Bureau of Economic Research in its series Development Economics Working Papers with number 22256.

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Date of creation: Jan 2005
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Handle: RePEc:eab:develo:22256
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  1. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
  2. Banerjee, Biswajit, 1981. "Rural-Urban Migration and Family Ties: An Analysis of Family Considerations in Migration Behaviour in India," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 43(4), pages 321-55, November.
  3. Adelman, Irma, 1985. "Shadow households and competing auspices: Migration behavior in the Philippines by F. Caces et al," Journal of Development Economics, Elsevier, vol. 17(1-2), pages 27-28.
  4. Gaytan-Fregoso, Helena & Lahiri, Sajal, 2000. "Foreign aid and illegal immigration," Journal of Development Economics, Elsevier, vol. 63(2), pages 515-527, December.
  5. Caces, Fe & Arnold, Fred & Fawcett, James T. & Gardner, Robert W., 1985. "Shadow households and competing auspices : Migration behavior in the Philippines," Journal of Development Economics, Elsevier, vol. 17(1-2), pages 5-25.
  6. Mazumdar, Dipak, 1976. "The Rural-Urban Wage Gap, Migration, and the Shadow Wage," Oxford Economic Papers, Oxford University Press, vol. 28(3), pages 406-25, November.
  7. Corden, W M & Findlay, Ronald, 1975. "Urban Unemployment, Intersectoral Capital Mobility and Development Policy," Economica, London School of Economics and Political Science, vol. 42(165), pages 59-78, February.
  8. George J. Borjas, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 3-22, Spring.
  9. Banerjee, Biswajit, 1991. "The determinants of migrating with a pre-arranged job and of the initial duration of urban unemployment : An analysis based on Indian data on rural-to-urban migrants," Journal of Development Economics, Elsevier, vol. 36(2), pages 337-351, October.
  10. Banerjee, Biswajit, 1984. "Information flow, expectations and job search : Rural-to-urban migration process in India," Journal of Development Economics, Elsevier, vol. 15(1-3), pages 239-257.
  11. Gupta, Manash Ranjan, 1988. "Migration, Welfare, Inequality and Shadow Wage," Oxford Economic Papers, Oxford University Press, vol. 40(3), pages 477-86, September.
  12. Ghatak, Subrata & Levine, Paul & Price, Stephen Wheatley, 1996. " Migration Theories and Evidence: An Assessment," Journal of Economic Surveys, Wiley Blackwell, vol. 10(2), pages 159-98, June.
  13. Shukla, Vibhooti & Stark, Oded, 1990. "Policy comparisons with an agglomeration effects-augmented dual economy model," Journal of Urban Economics, Elsevier, vol. 27(1), pages 1-15, January.
  14. Bhatia, Kul B, 1979. "Rural-Urban Migration and Surplus Labour," Oxford Economic Papers, Oxford University Press, vol. 31(3), pages 403-14, November.
  15. Gang, Ira N & Gangopadhyay, Shubhashis, 1987. "Optimal Policies in a Dual Economy with Open Unemployment and Surplus Labour," Oxford Economic Papers, Oxford University Press, vol. 39(2), pages 378-87, June.
  16. Basu, Kaushik C, 1980. "Optimal Policies in Dual Economies," The Quarterly Journal of Economics, MIT Press, vol. 95(1), pages 187-96, August.
  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.
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