To Stay or to Migrate? When Becker Meets Harris-Todaro

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

No 27767, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Allowing migration activity as an integral part of demographic transition and economic development, we establish a locational quantity-quality trade-off of children and explore its macroeconomic consequences. We construct a dynamic competitive migration equilibrium framework with rural agents heterogeneous in skills and fertility preferences. We then establish and characterize a mixed migration equilibrium where high-skilled rural agents with low fertility preferences always migrate to cities, low-skilled with high fertility preferences always stay, and only an endogenously determined fraction of high-skilled/high fertility preferences or low-skilled/low fertility preferences ends up moving. By calibrating our model to fit the data from China, we find interesting interactions between fertility and migration decisions in various counterfactual experiments with respect to changes in migration, population control and rural land entitlement policies. We conclude that overlooking the locational quantity-quality trade-off of children may lead to nonnegligible biases in assessing the implications and effectiveness of government policies.

JEL-codes: O15 O53 R23 R28 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-cna, nep-dge and nep-mig
Note: CH DEV EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: To stay or to migrate? When Becker meets Harris-Todaro (2024)
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