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

  • Zenou, Yves

    ()

    (Stockholm University)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5312.

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Length: 45 pages
Date of creation: Nov 2010
Date of revision:
Publication status: published in: Journal of Development Economics, 2011, [Article in Press]
Handle: RePEc:iza:izadps:dp5312
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  1. Pucher, John & Korattyswaropam, Nisha & Mittal, Neha & Ittyerah, Neenu, 2005. "Urban transport crisis in India," Transport Policy, Elsevier, vol. 12(3), pages 185-198, May.
  2. Wasmer, Etienne & Zenou, Yves, 2004. "Equilibrium Search Unemployment with Explicit Spatial Frictions," Working Paper Series 615, Research Institute of Industrial Economics.
  3. Mathan Satchi & Jonathan Temple, 2009. "Labor Markets and Productivity in Developing Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 183-204, January.
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  7. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
  8. Zenou, Yves, 2000. "Urban unemployment, agglomeration and transportation policies," Journal of Public Economics, Elsevier, vol. 77(1), pages 97-133, July.
  9. Wahba, Jackline & Zenou, Yves, 2005. "Density, social networks and job search methods: Theory and application to Egypt," Journal of Development Economics, Elsevier, vol. 78(2), pages 443-473, December.
  10. 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.
  11. 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.
  12. 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.
  13. Bosch, Mariano & Maloney, William, 2008. "Cyclical movements in unemployment and informality in developing countries," Policy Research Working Paper Series 4648, The World Bank.
  14. Mortensen, Dale T & Pissarides, Christopher, 1999. "New Developments in Models of Search in the Labour Market," CEPR Discussion Papers 2053, C.E.P.R. Discussion Papers.
  15. James Albrecht & Lucas Navarro & Susan Vroman, 2008. "The Effects of Labour Market Policies in an Economy with an Informal Sector," ILADES-Georgetown University Working Papers inv208, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
  16. Bosch, Mariano & Goni, Edwin & Maloney, William, 2007. "The determinants of rising informality in Brazil : Evidence from gross worker flows," Policy Research Working Paper Series 4375, The World Bank.
  17. repec:cup:cbooks:9780521875387 is not listed on IDEAS
  18. Jan K. Brueckner & Harris SELOD, 2006. "The political economy of urban transport-system choice," Working Papers 10220, Institut National de la Recherche Agronomique, France.
  19. Zenou, Yves, 2011. "Housing Policies in China: Issues and Options," IZA Policy Papers 24, Institute for the Study of Labor (IZA).
  20. Maloney, William, 2003. "Informality revisited," Policy Research Working Paper Series 2965, The World Bank.
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  29. 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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  33. 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.
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  35. Jyotsna Jalan & Martin Ravallion, 1998. "Geographic Poverty Traps?," Boston University - Institute for Economic Development 86, Boston University, Institute for Economic Development.
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