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Connecting lagging and leading regions : the role of labor mobility

  • Lall, Somik V.
  • Timmins, Christopher
  • Yu, Shouyue

How can policies improve the welfare of people in economically lagging regions of countries? Should policies help jobs follow people? Or should they enable people to follow jobs? In most countries, market forces have encouraged the geographic concentration of people and economic activities - policies that try to offset these forces to encourage balanced economic growth have largely been unsuccessful. However, policies that help people get closer to economic density have improved individual welfare. In this paper, the authors examine the migration decisions of working-age Brazilians and find that the pull of higher wages in leading regions has a strong influence on the decision to migrate. However, many people are also"pushed"to migrate, starved of access to basic public services such as clean water and sanitation in their hometowns. Although migration is welfare-improving for these individuals, the economy may end up worse off as these migrants are more likely to add to congestion costs in cities than to contribute to agglomeration benefits. Encouraging human capital formation can stimulate labor mobility for economic gain; and improving access to and quality of basic services in lagging regions will directly improve welfare as well as reduce the type of migration motivated by the search for life-supporting basic services.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4843.

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Date of creation: 01 Feb 2009
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Handle: RePEc:wbk:wbrwps:4843
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  1. Lall, Somik V. & Selod, Harris & Shalizi, Zmarak, 2006. "Rural-urban migration in developing countries : a survey of theoretical predictions and empirical findings," Policy Research Working Paper Series 3915, The World Bank.
  2. Falaris, Evangelos M, 1987. "A Nested Logit Migration Model with Selectivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(2), pages 429-43, June.
  3. Robert A. Margo, 1988. "Schooling and the Great Migration," NBER Working Papers 2697, National Bureau of Economic Research, Inc.
  4. Anderson, Kathryn & Pomfret, Richard, 2004. "Spatial Inequality and Development in Central Asia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. Patrick Bayer & Christopher Timmins, 2007. "Estimating Equilibrium Models Of Sorting Across Locations," Economic Journal, Royal Economic Society, vol. 117(518), pages 353-374, 03.
  6. Gordon B. Dahl, 2002. "Mobility and the Return to Education: Testing a Roy Model with Multiple Markets," Econometrica, Econometric Society, vol. 70(6), pages 2367-2420, November.
  7. Ahn, Hyungtaik & Powell, James L., 1993. "Semiparametric estimation of censored selection models with a nonparametric selection mechanism," Journal of Econometrics, Elsevier, vol. 58(1-2), pages 3-29, July.
  8. Ferreira, Pedro Cavalcanti Gomes & Salvato, Márcio Antônio & Duarte, Angelo José Mont'Alverne, 2004. "Regional or educational disparities? A counterfactual exercise," Economics Working Papers (Ensaios Economicos da EPGE) 532, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  9. Bayer, Patrick & Keohane, Nathaniel & Timmins, Christopher, 2009. "Migration and hedonic valuation: The case of air quality," Journal of Environmental Economics and Management, Elsevier, vol. 58(1), pages 1-14, July.
  10. Timmins, Christopher & Murdock, Jennifer, 2007. "A revealed preference approach to the measurement of congestion in travel cost models," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 230-249, March.
  11. Chun-Chung Au & Vernon Henderson, 2002. "How Migration Restrictions Limit Agglomeration and Productivity in China," NBER Working Papers 8707, National Bureau of Economic Research, Inc.
  12. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
  13. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 375-80, December.
  14. Carvalho, Alexandre & Lall, Somik V. & Timmins, Christopher, 2006. "Regional subsidies and industrial prospects of lagging regions," Policy Research Working Paper Series 3843, The World Bank.
  15. Christopher Timmins, 2005. "Estimable equilibrium models of locational sorting and their role in development economics," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 83-100, January.
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