Rural-Urban Migration and the Intergenerational Transmission of Wealth

Ayesha Enver and Mark Partridge

No 6475, 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This paper extends the literature on poverty traps and regional economics by incorporating rural-urban migration, human capital externalities, and regional agglomeration effects into Galor and Zeira’s (1993) overlapping generations model to examine the welfare impacts of various person-based and place-based policies. We formalize the conditions that may induce a rural brain-drain. The model is calibrated and simulated to demonstrate how regions with different production and housing technologies may respond differently to a given policy. Our results show that for certain parameter values, well intended policies targeting poor households may instead worsen their longrun welfare outcomes if households prefer not to migrate to the wealthier urban region when awarded an education subsidy. In other cases, person-based policies are shown to improve the long-run welfare of poorer households by facilitating migration to the city. Place-based policies that enhance rural firm productivity without targeting individual households may yield higher average welfare for rural residents. In some instances, the benefits of place-based policies may not trickle down to less wealthier households, whereas in other cases, they are more effective than the subsidy program in improving the welfare of the poorest.

Keywords: Consumer/Household Economics; Labor and Human Capital (search for similar items in EconPapers)
Pages: 30
Date: 2008
New Economics Papers: this item is included in nep-dev, nep-lab and nep-mig
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea08:6475

DOI: 10.22004/ag.econ.6475

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