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Preference Matching, Income, and Population Distribution in Urban and Adjacent Rural Regions

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  • Batabyal, Amitrajeet
  • Beladi, Hamid

Abstract

We analyze the impact of preference matching and income on the distribution of the population in an aggregate economy consisting of an urban and an adjacent rural region. It costs more (less) to live in the urban (rural) region. Individuals choose freely to live either in the urban or in the rural region. They differ in their incomes. These incomes are uniformly distributed on the unit interval. Our analysis leads to four results. First, when the cost differential parameter satisfies a condition, both regions are occupied in the equilibrium. Second, when this parametric condition holds, in any equilibrium in which the mean income of individuals varies across the two regions, every resident of the rural region has a lower income than every resident of the urban region. Third, there exists an income threshold and all individuals with higher (lower) incomes choose to live in the urban (rural) region. Finally, in the equilibrium with income sorting, it is possible to make everyone better off by slightly modifying their residential choices.

Suggested Citation

  • Batabyal, Amitrajeet & Beladi, Hamid, 2018. "Preference Matching, Income, and Population Distribution in Urban and Adjacent Rural Regions," MPRA Paper 92308, University Library of Munich, Germany, revised 18 Dec 2018.
    • Handle: RePEc:pra:mprapa:92308
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    References listed on IDEAS

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    1. Amit Batabyal & Peter Nijkamp, 2014. "Technology, Learning, and Long Run Economic Growth in Leading and Lagging Regions," ERSA conference papers ersa14p893, European Regional Science Association.
    2. Amartya K. Sen, 1966. "Peasants and Dualism with or without Surplus Labor," Journal of Political Economy, University of Chicago Press, vol. 74(5), pages 425-425.
    3. Amitrajeet A. BATABYAL, 2018. "Note On Local Public Good Induced Spillovers Between A Leading And A Lagging Region," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 11-16, July.
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    6. Batabyal, Amitrajeet & Nijkamp, Peter, 2014. "Some properties of the technology gap between leading and lagging regions," MPRA Paper 71596, University Library of Munich, Germany.
    7. Kimhi, Ayal & Sarit Menahem-Carmi, 2017. "Does rural household income depend on neighboring urban centers?Evidence from Israel," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 13(1), pages 26-35, JUNE.
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    Cited by:

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    Keywords

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    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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