Social influence, agent heterogeneity and the emergence of the urban informal sector

César García-Díaz and Ana Moreno-Monroy

Physica A: Statistical Mechanics and its Applications, 2012, vol. 391, issue 4, 1563-1574

Abstract: We develop an agent-based computational model in which the urban informal sector acts as a buffer where rural migrants can earn some income while queuing for higher paying modern-sector jobs. In the model, the informal sector emerges as a result of rural–urban migration decisions of heterogeneous agents subject to social influence in the form of neighboring effects of varying strengths. Besides using a multinomial logit choice model that allows for agent idiosyncrasy, explicit agent heterogeneity is introduced in the form of socio-demographic characteristics preferred by modern-sector employers. We find that different combinations of the strength of social influence and the socio-economic composition of the workforce lead to very different urbanization and urban informal sector shares. In particular, moderate levels of social influence and a large proportion of rural inhabitants with preferred socio-demographic characteristics are conducive to a higher urbanization rate and a larger informal sector.

Keywords: Agent-based modeling; Rural–urban migration; Adaptation and self-organizing systems; Physics and society (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:391:y:2012:i:4:p:1563-1574

DOI: 10.1016/j.physa.2011.08.057

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