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Do rent-seeking and interregional transfers contribute to urban primacy in sub-Saharan Africa?

Author

Listed:
  • Alain P. Bala
  • Kristian Behrens

Abstract

We develop an economic geography model in which mobile skilled workers choose between working in the production sector or becoming part of an unproductive political elite. The elite sets tax rates on skilled and unskilled workers to maximize its own welfare by extracting rents, thereby influencing the spatial allocation of production and changing the available range of consumption goods. We show that such behavior increases the likelihood of agglomeration and of urban primacy. In equilibrium, the elite may tax the unskilled workers but will never tax the skilled workers, and there are rural-urban transfers towards the agglomeration. The size of the elite and the magnitude of the tax burden that falls on the unskilled is shown to decrease with product differentiation and, via the tax rates, with the expenditure share for manufacturing goods.
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Suggested Citation

  • Alain P. Bala & Kristian Behrens, 2011. "Do rent-seeking and interregional transfers contribute to urban primacy in sub-Saharan Africa?," ERSA Working Paper Series 237, Economic Research Southern Africa.
    • Handle: RePEc:rza:ersawp:237
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    Cited by:

    1. is not listed on IDEAS
    2. Decai Tang & Zhijiang Li & Brandon J. Bethel, 2019. "Relevance Analysis of Sustainable Development of China’s Yangtze River Economic Belt Based on Spatial Structure," IJERPH, MDPI, vol. 16(17), pages 1-16, August.
    3. Castells-Quintana, David, 2017. "Malthus living in a slum: Urban concentration, infrastructure and economic growth," Journal of Urban Economics, Elsevier, vol. 98(C), pages 158-173.
    4. De Weerdt, Joachim & Christiansen, Lue & Kanbur, Ravi, "undated". "When Distance Drives Destination, Towns can Stimulate Development," Applied Economics and Policy Working Paper Series 310517, Cornell University, Department of Applied Economics and Management.
    5. Frick, Susanne A. & Rodríguez-Pose, Andrés, 2018. "Change in urban concentration and economic growth," World Development, Elsevier, vol. 105(C), pages 156-170.
    6. Christiaensen, Luc & Todo, Yasuyuki, 2014. "Poverty Reduction During the Rural–Urban Transformation – The Role of the Missing Middle," World Development, Elsevier, vol. 63(C), pages 43-58.
    7. Luc Christiaensen & Joachim Weerdt & Yasuyuki Todo, 2013. "Urbanization and poverty reduction: the role of rural diversification and secondary towns," Agricultural Economics, International Association of Agricultural Economists, vol. 44(4-5), pages 435-447, July.
    8. Jacques†François Thisse, 2018. "Human Capital and Agglomeration Economies in Urban Development," The Developing Economies, Institute of Developing Economies, vol. 56(2), pages 117-139, June.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • 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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