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World Bank Policy Research Working Paper 3915, May 2006
Somik V. Lall**, Harris Selod+ and Zmarak Shalizi**
** Development Research Group, The World Bank,
1818 H St. N.W. Washington DC 20433, USA
+ INRA (Paris-Jourdan), CREST and CEPR,
48 boulevard Jourdan, 75014 Paris, France.
Abstract
The migration of labor from rural to urban areas is an important part of the urbanization
process in developing countries. Even though it has been the focus of abundant research
over the past five decades, some key policy questions have not found clear answers yet.
To what extent is internal migration a desirable phenomenon and under what
circumstances? Should governments intervene and if so with what types of interventions?
What should be their policy objectives? To shed light on these important issues, we
survey the existing theoretical models and their conflicting policy implications, and
discuss the policies that may be justified based on recent relevant empirical studies. A
key limitation is that much of the empirical literature does not provide structural tests of
the theoretical models, but only provides partial findings that can support or invalidate
intuitions and in that sense support or invalidate the policy implications of the models.
Our broad assessment of the literature is that migration can be beneficial or at least be
turned into a beneficial phenomenon, so that in general migration restrictions are not
desirable. We also identify some data issues and research topics which merit further
investigation.
1 INTRODUCTION.................................................................................................................. 3
2 THEORETICAL MODELS AND POLICY IMPLICATIONS ......................................................... 8
2.1 The beneficial role of migration in early dual economy models .............................. 8
2.2 The harmful role of migration in Todarian models ................................................ 10
2.2.1) The basic setting ............................................................................................. 10
2.2.2) Policy recommendations arising from the Harris-Todaro models.................. 13
2.2.3) Critiques of the standard Harris-Todaro model and its policy implications... 16
2.2.4) Extensions of the Harris-Todaro model and their policy implications........... 19
2.3 The potentially beneficial role of migration in recent models................................ 21
2.3.1) More elaborate explanations of migration selectivity -- who chooses to
migrate ...................................................................................................................... 21
2.3.2) The job-search approach -- when and how to migrate ................................... 23
2.3.3) Migration’s positive effect on rural development .......................................... 25
3 EMPIRICAL MODELS AND POLICY IMPLICATIONS ........................................................... 27
3.1 The decision to migrate........................................................................................... 27
3.2 The consequences of migration .............................................................................. 32
3.2.1) Consequences of migration for the individual................................................ 32
3.2.2) Consequences of migration for the rural area of origin.................................. 37
3.2.3) Consequences of migration for the urban area of destination ........................ 42
3.2.4) Consequences of migration for the economy as a whole ............................... 45
4 CONCLUSION................................................................................................................... 46
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