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Inter-city Migration and Policy

Author

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  • Hannu Laurila

    (School of Management, University of Tampere)

Abstract

The seminal Buchanan-Ng club model is used to analyze optimal allocation ofpopulation between non-homogenous cities. Because of externalities (marginal welfareeffects), migration cannot alone ensure efficiency and policy intervention is needed. Inprinciple, a first-best optimum is achievable, if the externalities are properly calculatedand internalized to people's decisions by local or centralized policy. Yet, implementationof these policies is not so straightforward in practice. Consolidation of central and localpolicies based on average welfare is more promising. In club theoretic terms, the mainfinding is that total-economy viewed policy making is not necessary to evoke Paretoefficiency even when the number of clubs is fixed. In other words, neither Pigouvianpolicy instruments nor Coasian bargaining is needed to reach the first-best optimum.

Suggested Citation

  • Hannu Laurila, 2010. "Inter-city Migration and Policy," Working Papers 1082, Tampere University, Faculty of Management and Business, Economics.
    • Handle: RePEc:tam:wpaper:1082
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    File URL: http://urn.fi/urn:isbn:978-951-44-8277-9
    File Function: First version, 2010
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    References listed on IDEAS

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    1. Pierre Philippe Combes & Gilles Duranton & Henry G. Overman, 2005. "Agglomeration and the adjustment of the spatial economy§," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 311-349, August.
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    More about this item

    Keywords

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    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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