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Increasing political returns and rural-urban migrations

Listed author(s):
  • Gabriel Sánchez

This paper analyzes the different equilibria in rural-urban migrations and political redistribution that result from the interaction between increasing political returns, the distribution of land, and credit market imperfections. Governments that put a special weight on the welfare of urban workers when setting agricultural prices generate a political externality in the urban sector, giving peasants an incentive to migrate in anticipation of policy determination. If credit markets are imperfect, land ownership confers higher productivity to peasants, who require large price changes to migrate. In this context, land inequality would lead to large migrations and to large policy change, while an egalitarian land distribution would lead to no migration and to a small policy change. This interaction sheds light on the contrasting experience of Latin America and East Asia at the outset of World War II.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 332.

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Date of creation: Aug 1998
Handle: RePEc:upf:upfgen:332
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