Where to Create Jobs
Should public investment be targeted to big cities or to small towns, if the objective is to minimize national poverty? To answer this policy question the authors extend the basic Todaro-type model of rural-urban migration to the case of migration from rural areas to two potential destinations, secondary town and big city. The authors first derive labor income, migration cost and poverty line conditions under which a poverty gradient from rural to town to city will exist as an equilibrium phenomenon. The authors then develop sufficient statistics for the policy decisions based on these income parameters. The empirical remit of the model is illustrated with long running panel data from Kagera, Tanzania. Further, we show that the structure of the sufficient statistics is maintained in the case where the model is generalized to introduce heterogeneous workers and jobs.
| Main Authors: | , , |
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| Format: | Working Paper biblioteca |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017-04-21
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| Subjects: | PUBLIC INVESTMENT, EMPLOYMENT, CITY, RURAL, OPPORTUNITIES, ECONOMIC GROWTH, URBANIZATION, JOB CREATION, URBAN DEVELOPMENT, |
| Online Access: | http://documents.worldbank.org/curated/en/961241497606064062/Where-to-create-jobs-cities-or-towns https://hdl.handle.net/10986/27478 |
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| Summary: | Should public investment be targeted to
big cities or to small towns, if the objective is to
minimize national poverty? To answer this policy question
the authors extend the basic Todaro-type model of
rural-urban migration to the case of migration from rural
areas to two potential destinations, secondary town and big
city. The authors first derive labor income, migration cost
and poverty line conditions under which a poverty gradient
from rural to town to city will exist as an equilibrium
phenomenon. The authors then develop sufficient statistics
for the policy decisions based on these income parameters.
The empirical remit of the model is illustrated with long
running panel data from Kagera, Tanzania. Further, we show
that the structure of the sufficient statistics is
maintained in the case where the model is generalized to
introduce heterogeneous workers and jobs. |
|---|