The Welfare Effects of Encouraging Rural-Urban Migration

Lagakos, David; Mobarak, Mushfiq; Waugh, Michael E.

doi:10.21034/sr.635

Cited by 25 publications

(26 citation statements)

References 35 publications

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“…and includes (i) an iceberg cost that reduces the non-agricultural wage by a fraction i in each period, and (ii) a fixed cost that reduces the wage in the destination sector by a fraction f in periods when a change of sector takes place. The iceberg cost can be interpreted as an amenity cost -as in Lagakos et al (2019) -or as any other flow cost associated with leaving the agricultural sector, as, for example, the exclusion from risk-sharing communities (Munshi and Rosenzweig, 2016;Morten, 2019). The fixed cost can be interpreted as a onetime mobility cost, which might be driven by actual moving expenses (if a geographical move is necessary to change sector) or any other associated cost, such as retraining, idle time in between jobs, or one-time emotional costs.…”

Section: Environmentmentioning

confidence: 99%

“…Hsieh et al (2019) also exploit year and cohort effects to calibrate a model of allocation of talent; compared to their work, we focus on a simpler framework that allows us to analytically consider fixed-cost-type frictions, which turn out to be crucial to correctly identify the role of changes in the supply of agricultural workers. In emphasizing the importance of comparative advantage, our work also relates to Lagakos and Waugh (2013), Young (2013) and Nakamura et al (2016).…”

Section: Introductionmentioning

confidence: 99%

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The Human Side of Structural Transformation

Porzio

Rossi

Santangelo

2022

American Economic Review

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We document that nearly half of the global decline in agricultural employment was driven by new cohorts entering the labor market. A new dataset of policy reforms supports an interpretation of these cohort effects as human capital. Using a model of frictional labor reallocation, we conclude that human capital growth led to a sharp decline in the agricultural labor supply, accounting, at fixed prices, for 40 percent of the decrease in agricultural employment. This aggregate effect is halved in general equilibrium and it reflects the role of human capital as both a mediating factor and an independent driver of labor reallocation. (JEL J22, J24, J43, L16, O13, O14, Q10)

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Section: Environmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The Human Side of Structural Transformation

Porzio

Rossi

Santangelo

2022

American Economic Review

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“…Working with models of spatial equilibrium with dynamics is difficult, but is an active area of research (e.g., Balboni 2019;Caliendo, Dvorkin, and Parro 2019;and Ahlfeldt, Bald, Roth and Seidel 2019). Finally there are other considerations of incomplete markets and risk raised by the Bangladesh experiments conducted in the context of round trip, or seasonal migration, which also find high disutility or lack of affinity from migration, as reviewed in Lagakos, Mobarak, and Waugh (2018).…”

Section: The Roback Model Meets Current Patterns Of Urbanizationmentioning

confidence: 99%

Urbanization in the Developing World: Too Early or Too Slow?

Henderson¹,

Turner²

2020

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We describe patterns of urbanization in the developing world and the extent to which they differ from the developed world. We consider the extent to which urbanization in the developing world can be explained by conventional models of spatial equilibrium. Despite their relative poverty, developing world cities are relatively highly productive, and often provide good access to safe water, improved sanitation, schooling and inoculations. In some parts of the world, they are home to a surprisingly small number of factory workers and a surprisingly large number of farmers. Developing world cities seem to do less well at protecting their residents from lifestyle diseases and crime, their female residents from domestic violence and their children from illness. In thinking about these facts, we note that one strand of the literature focused on structural transformation has suggested that urbanization in the developing is occurring `too early', while another strand argues that urbanization is occurring `too slow' to be consistent with conventional models of spatial equilibrium. Despite many differences between developing and developed world cities, our new results combined with those in the literature suggest that models of spatial equilibrium can be adapted to be a useful guide to understanding the process of urbanization in the developing world.

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“…Also in this vein, Brooks and Donovan (Forthcoming) flush out the general-equilibrium effects of improved transportation infrastructure on rural farmers starting with reduced-form evidence on the effects of rural bridge building. Using a similar methodology, Lagakos, Mobarak, and Waugh (2020) quantify the aggregate effects of subsides to rural-urban migration, and Akcigit, Alp, and Peters (Forthcoming) infer the general equilibrium effects of improving managerial capabilities.…”

Section: Introductionmentioning

confidence: 99%