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Rural Urban Interaction And Migration Notes
This is a sample of our (approximately) 7 page long Rural Urban Interaction And Migration notes, which we sell as part of the Development Economics-1 Notes collection, a 1st Class package written at Oxford University in 2011 that contains (approximately) 365 pages of notes across 19 different documents.
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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'
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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