Where to Create Jobs to Reduce Poverty : Cities or Towns?
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, this paper extends the basic Todaro-type model of rural-urban migration to the case of migration...
| Main Authors: | , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/434811495466355613/Where-to-create-jobs-to-reduce-poverty-cities-or-towns http://hdl.handle.net/10986/26839 |
| 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,
this paper extends 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 analysis first derives the 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. Then sufficient statistics are
developed for the policy decisions based on these
parameters. The empirical remit of the model is illustrated
with long-running panel data from Kagera, Tanzania. Further,
the paper shows that the structure of the sufficient
statistics is maintained in the case where the model is
generalized to introduce heterogeneous workers and jobs. |
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