To stay or to migrate? When Becker meets Harris-Todaro

Yin-Chi Wang, Pei-Ju Liao, Ping Wang and Chong Kee Yip

European Economic Review, 2024, vol. 169, issue C

Abstract: Allowing migration as an integral part of demographic transition and economic development, we construct a dynamic competitive migration equilibrium framework with rural agents heterogeneous in skills and fertility preferences to establish a location-fertility trade-off and explore its macroeconomic consequences. We characterize a mixed migration equilibrium where an endogenously determined fraction of high-skilled agents with high fertility preferences or low-skilled agents with low fertility preferences ultimately moves. By calibrating the model to fit the data from China, whose migration and population control policies offer a rich array of issues for quantitative investigation, we find strong interactions between migration and fertility decisions – the location-fertility trade-off – and rich interplay between the joint responses of these choices to changes in migration and population control policies. Our results indicate that both output per capita and urbanization rates are more responsive than Total Fertility Rate (TFR) to migration and population policies: A one-percent decrease in TFR corresponds to an over one-percent increase in output per capita and a more than two-percent rise in urbanization rates. Overlooking the location-fertility trade-off may thus lead to nonnegligible biases in assessing the implications and effectiveness of government policies.

Keywords: Rural-urban migration; Fertility; Urbanization; Development (search for similar items in EconPapers)
JEL-codes: E24 O15 R23 (search for similar items in EconPapers)
Date: 2024
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Working Paper: To Stay or to Migrate? When Becker Meets Harris-Todaro (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:169:y:2024:i:c:s0014292124001600

DOI: 10.1016/j.euroecorev.2024.104831

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