Rural Urban Interaction And Migration Notes
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RURAL URBAN INTERACTION AND MIGRATION 'Development Economics' Ray 1998 (Ch. 10) • 'As economic development proceeds, individuals move from rural to urban areas, agriculture acts as a supplier of labour to industry' • The Lewis Model o The Dual Economy Surplus labour from 'traditional' to 'modern' sector • Can be removed at little or no opp. Cost • Why is surplus labour important? o Urban workers still want food! o May ↑work effort. • Rural urban migration 'Leading issues in economic development' Meier & Rauch 2000 • Economic development with unlimited supplies of labour o Population so large relative to capital and resources MPL is negligible or even -ve o 'disguised' use in agricultural sector o 'each trader makes only a few sales; markets are crowded with stalls, and if the number of stalls were greatly ↓the consumers would be no whit worse off' • ↑labour force? o 'one of the surest ways of ↑the national income is therefore to create new sources of employment for women outside the home' o ↑population as a result of births > deaths o Use generated by ↑efficiency BUT doesn't seem to have occurred • 'A 70% urban real wage premium for example, might be of little consequence to the prospective migrant if his chances of actually securing a job are, say, one in fifty' o Although may still be economically rational in the long run. • Lewis suggests that wages remain constant: o This means that earnings of owners of capital equipment would not be ↓by ↑wages, and he believed that these earnings were the main source of savings that would finance further investment and drive economic growth. • With H-T model there is no subsistence wage. • Jamaica: o Distorted wage structure - workers of same skill level receive different wages in different industries. o 'many of the u/e, though by no means all, may be better off than those fully employed in the low wage sector.' o 98% of heads of household wanting work were u/e o u/e level in sending areas was +vely (and sig.) associated with migration 'migration occurs largely in response to wage differentiation and in spite of higher u/e levels in high wage areas.' • wage↑ in high wage areas of 10%↑rate of migration by 30%
• So, why does comparatively prosperous and rapidly growing Jamaica seemingly have more u/e than poor and stagnant Haiti? o 'the larger the high wage modern sector, the more u/e an economy can afford to support.'
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