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

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  • Zenou, Yves

    (Monash University)

Abstract

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.

Suggested Citation

  • Zenou, Yves, 2010. "Search, Migration, and Urban Land Use: The Case of Transportation Policies," IZA Discussion Papers 5312, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp5312
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    Cited by:

    1. Héctor M. Posada & Ana I. Moreno-Monroy, 2017. "Informality, city structure and rural–urban migration in Latin America," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(2), pages 345-369, September.
    2. Muhammad Asim & Hafiza Naila Saddique, 2020. "Migration And Unemployment In Pakistan: A Time Series Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 9(3), pages 123-134, September.
    3. Moreno-Monroy, Ana I. & Posada, Héctor M., 2018. "The effect of commuting costs and transport subsidies on informality rates," Journal of Development Economics, Elsevier, vol. 130(C), pages 99-112.
    4. Liu, Tie-Ying & Su, Chi-Wei, 2021. "Is transportation improving urbanization in China?," Socio-Economic Planning Sciences, Elsevier, vol. 77(C).
    5. Sato, Yasuhiro & Zenou, Yves, 2015. "How urbanization affect employment and social interactions," European Economic Review, Elsevier, vol. 75(C), pages 131-155.
    6. Huang, Hai-Jun & Xia, Tian & Tian, Qiong & Liu, Tian-Liang & Wang, Chenlan & Li, Daqing, 2020. "Transportation issues in developing China's urban agglomerations," Transport Policy, Elsevier, vol. 85(C), pages 1-22.
    7. Héctor M. Posada, 2018. "Informal housing, spatial structure, and city compactness," Journal of Regional Science, Wiley Blackwell, vol. 58(4), pages 822-836, September.
    8. Torfs, Wouter & Zhao, Liqiu, 2015. "Everybody needs good neighbors? Labor mobility costs, cities and matching," Regional Science and Urban Economics, Elsevier, vol. 55(C), pages 39-54.
    9. Boitier, Vincent, 2018. "The role of labor market structure in urban sprawl," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 83-98.

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    More about this item

    Keywords

    restricting migration; transportation policies; rural-urban migration; entry costs;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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