Migration and economic development in less-developed countries.

Abstract

This study explores the various issues of urban-to-rural migration in a developing country. The main issue of urban-to-rural migration is that as rural-to-urban migration takes place largely for economic reasons, so does urban-to-rural migration. A theoretical model is constructed to demonstrate urban-to-rural migration as a rational choice of maximizing earnings over the entire planning horizon of a rural migrant. An empirical analysis is conducted to test empirically the theoretical predictions about urban-to-rural migration derived from the model, yielding weak empirical evidence. In order to examine the dynamic interaction between rural-urban migration and other economic variables in less-developed countries in this migration study, the behavior of an individual migrant is extended to an aggregate level. A computable general equilibrium model of rural-urban migration is constructed to investigate the role of migration in a developing economy which consists of three sectors, the urban formal, the urban informal, and the rural sectors. By conducting a simulation analysis of migration in Korea, this study explains the nature of rural-urban migration in relation to other macroeconomic variables in the economy. The simulation shows that more urban-to-rural migration would increase the economy-wide output in the Korean economy. The simulation also demonstrates that a trade policy of lowering tariffs on traded goods would diminish internal rural-urban migration, inducing fewer people to move between the countryside and the city in Korea.