Insurance Motives for Rural-to-Urban Migration
In this paper, we attempt to develop an intertemporal model of rural-to-urban migration in the context of a poor rural economy. With a peasant household as the decision making unit we explore how rural-to-urban migration may be adopted as a strategy mto cope with the income risks arising from employment uncertainties. In particular, we show that it may be optimal for households, in the absence of formal insurance markets, to allocate some of their labour power to urban labour market, i.e., send some household members to the coty to seek unskilled jobs and thereby achieve an optimal risk spreading, given that the income risks in urban and rural labour markets respectively are idissyncratic.
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|Date of creation:||1998|
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