IDEAS home Printed from https://ideas.repec.org/p/fer/dpaper/310.html
   My bibliography  Save this paper

What Draws People to Urban Growth Centers: Jobs vs. Pay?

Author

Listed:
  • Pekkala, Sari

Abstract

The present study analyses migration patterns in Finland to test if microeconomic evidence for the Harris-Todaro model can be found. The Harris-Todaro hypothesis states that rural-urban migration stems from regional differences in the wage level and the chances of finding work. To test the hypothesis one needs to predict urban and rural wage and employment probability for each individual. This method is applied to a study of the recent migratory trend in Finland in which most migrants are heading towards a few urban growth centers while the rest of Finland is losing its population. The present study finds evidence for the Harris-Todaro model and concludes that rural urban migration is a result of higher wages and, even more so, better employment prospects in urban areas. Demographic factors may serve to reduce the migration flows in future, but this reduction is likely to remain modest. The results suggest that the best way to prevent excessive rural population loss is to pay attention to job-creation schemes, concentrating especially on workers with secondary and tertiary education.

Suggested Citation

  • Pekkala, Sari, 2003. "What Draws People to Urban Growth Centers: Jobs vs. Pay?," Discussion Papers 310, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:310
    as

    Download full text from publisher

    File URL: https://www.doria.fi/handle/10024/148289
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Small, Kenneth A & Hsiao, Cheng, 1985. "Multinomial Logit Specification Tests," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 619-627, October.
    2. Karsten Albæk & Rita Asplund & Stig Blomskog & Erling Barth & Björn Rúnar Guðmundsson & Vifill Karlsson & Erik Strøjer Madsen, 1999. "Dimensions of the Wage-Unemployment Relationship in the Nordic Countries: Wage Flexibility without Wage Curves," Discussion Papers 99-24, University of Copenhagen. Department of Economics.
    3. Tuomas Pekkarinen, 2001. "The wage curve : evidence from the Finnish metal industry panel data," Finnish Economic Papers, Finnish Economic Association, vol. 14(1), pages 51-60, Spring.
    4. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, April.
    5. Todaro, Michael P., 1976. "Urban job expansion, induced migration and rising unemployment : A formulation and simplified empirical test for LDCs," Journal of Development Economics, Elsevier, vol. 3(3), pages 211-225, September.
    6. McCormick, Barry & Wahba, Jackline, 2003. "Did public wage premiums fuel agglomeration in LDCs?," Journal of Development Economics, Elsevier, vol. 70(2), pages 349-379, April.
    7. Bhattacharya, Prabir C, 1993. "Rural-Urban Migration in Economic Development," Journal of Economic Surveys, Wiley Blackwell, vol. 7(3), pages 243-281, September.
    8. Todaro, Michael P, 1969. "A Model for Labor Migration and Urban Unemployment in Less Developed Countries," American Economic Review, American Economic Association, vol. 59(1), pages 138-148, March.
    9. Larry A. Sjaastad, 1970. "The Costs and Returns of Human Migration," Palgrave Macmillan Books, in: Harry W. Richardson (ed.), Regional Economics, chapter 9, pages 115-133, Palgrave Macmillan.
    10. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    11. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    12. Hausman, Jerry & McFadden, Daniel, 1984. "Specification Tests for the Multinomial Logit Model," Econometrica, Econometric Society, vol. 52(5), pages 1219-1240, September.
    13. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July.
    14. Jan K. Brueckner & Hyun‐A Kim, 2001. "Land Markets in the Harris‐Todaro Model: A New Factor Equilibrating Rural‐Urban Migration," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 507-520, August.
    15. Brueckner, Jan K. & Zenou, Yves, 1999. "Harris-Todaro models with a land market," Regional Science and Urban Economics, Elsevier, vol. 29(3), pages 317-339, May.
    16. McCormick, Barry & Wahba, Jackline, 2000. "Did public wage premiums fuel agglomeration in LDCs?," Discussion Paper Series In Economics And Econometrics 0020, Economics Division, School of Social Sciences, University of Southampton.
    17. Thomas Krichel & Paul Levine, 1997. "The Welfare Economics of Rural to Urban Migration: The Harris-Todaro Model Revisited," School of Economics Discussion Papers 9702, School of Economics, University of Surrey.
    18. Mincer, Jacob, 1978. "Family Migration Decisions," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 749-773, October.
    19. Bun Song Lee & Joseph Phillips, 1997. "The Earnings Experience of Rural-Urban Migrants in Korea," International Economic Journal, Taylor & Francis Journals, vol. 11(4), pages 85-101.
    20. McCormick, Barry & Wahba, Jackline, 2000. "Did public wage premiums fuel agglomeration in LDCs?," Discussion Paper Series In Economics And Econometrics 20, Economics Division, School of Social Sciences, University of Southampton.
    21. Cole, William E & Sanders, Richard D, 1985. "Internal Migration and Urban Employment in the Third World," American Economic Review, American Economic Association, vol. 75(3), pages 481-494, June.
    22. Arnott, Richard J & Gersovitz, Mark, 1986. "Social Welfare Underpinnings of Urban Bias and Unemployment," Economic Journal, Royal Economic Society, vol. 96(382), pages 413-424, June.
    23. Carter, Thomas J., 1998. "Urban productivity, urban unemployment, and labor market policies," Regional Science and Urban Economics, Elsevier, vol. 28(3), pages 329-344, May.
    24. Richard Agesa, 2000. "The incentive for rural to urban migration: a re-examination of the Harris-Todaro model," Applied Economics Letters, Taylor & Francis Journals, vol. 7(2), pages 107-110.
    25. Krugman, Paul & Venables, Anthony J, 1990. "Integration and the Competitiveness of Peripheral Industry," CEPR Discussion Papers 363, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pekkala, Sari, 2002. "Regional growth centres - the most attractive location in Finland?," ERSA conference papers ersa02p087, European Regional Science Association.
    2. Lall, Somik V. & Selod, Harris & Shalizi, Zmarak, 2006. "Rural-urban migration in developing countries : a survey of theoretical predictions and empirical findings," Policy Research Working Paper Series 3915, The World Bank.
    3. Busso, Matias & Chauvin, Juan Pablo & Herrera L., Nicolás, 2021. "Rural-urban migration at high urbanization levels," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    4. Consuelo Abellán-Colodrón, 1998. "Ganancia salarial esperada como determinante de la decisión individual de emigrar," Investigaciones Economicas, Fundación SEPI, vol. 22(1), pages 93-117, January.
    5. 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.
    6. Yves Zenou, 2011. "Rural–Urban Migration And Unemployment: Theory And Policy Implications," Journal of Regional Science, Wiley Blackwell, vol. 51(1), pages 65-82, February.
    7. João Pereira, 2007. "Mobilidade Geográfica e Distância da Deslocação em Portugal," Notas Económicas, Faculty of Economics, University of Coimbra, issue 25, pages 42-58, June.
    8. Roberto Roca Paz & Silke Uebelmesser, 2021. "Risk attitudes and migration decisions," Journal of Regional Science, Wiley Blackwell, vol. 61(3), pages 649-684, June.
    9. Sari Pekkala, 2003. "Migration Flows in Finland: Regional Differences in Migration Determinants and Migrant Types," International Regional Science Review, , vol. 26(4), pages 466-482, October.
    10. Dong, Qi & Murakami, Tomoaki & Nakashima, Yasuhiro, 2018. "Modeling the Labor Transfers from the Agricultural Sector to the Non-agricultural Sector under Food Supply Constraint in China," 2018 Annual Meeting, August 5-7, Washington, D.C. 274161, Agricultural and Applied Economics Association.
    11. Zenou, Yves, 2005. "The Todaro Paradox Revisited," IZA Discussion Papers 1861, Institute of Labor Economics (IZA).
    12. Fukase, Emiko, 2013. "Foreign job opportunities and internal migration in Vietnam," Policy Research Working Paper Series 6420, The World Bank.
    13. Villalobos, Carlos & Riquelme, Andrés, 2023. "Household constraints and dysfunctional rural–urban migration," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1070-1088.
    14. Roberto A. De Santis, 2003. "The Impact of a Customs Union with the European Union on Internal Migration in Turkey," Journal of Regional Science, Wiley Blackwell, vol. 43(2), pages 349-372, May.
    15. Ather Maqsood Ahmed & Ismail Sirageldin, 1993. "Socio-economic Determinants of Labour Mobility in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(2), pages 139-157.
    16. David P. Lindstrom & Silvia E. Giorguli-Saucedo, 2007. "The interrelationship of fertility, family maintenance and Mexico-U.S. Migration," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 17(28), pages 821-858.
    17. João Ricardo Faria & Franklin G. Mixon, 2022. "Labor Markets and Sustainability: Short-Run Dynamics and Long-Run Equilibrium," Sustainability, MDPI, vol. 14(7), pages 1-10, April.
    18. Sari Pekkala, 2002. "Migration and Individual Earnings in Finland: A Regional Perspective," Regional Studies, Taylor & Francis Journals, vol. 36(1), pages 13-24.
    19. Wei-Bin Zhang, 2008. "A Two-Sector Growth Model with Endogenous Human Capital and Amenities," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 6(2), pages 95-116.
    20. Hagen-Zanker, Jessica, 2010. "Modest expectations: Causes and effects of migration on migrant households in source countries," MPRA Paper 29507, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fer:dpaper:310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anita Niskanen (email available below). General contact details of provider: https://edirc.repec.org/data/vatttfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.