Reference-dependent preference and interregional migration: extending the Harris–Todaro model

Kiyoshi Yonemoto ()
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Kiyoshi Yonemoto: Takasaki City University of Economics

Letters in Spatial and Resource Sciences, 2021, vol. 14, issue 1, No 1, 10 pages

Abstract: Abstract This study theoretically illustrates migration between regions and relative poverty, assuming a consumer (resident) has a reference-dependent preference. The model is primarily based on Harris and Todaro (Am Econ Rev 60:126–142, 1970), and the effect of the reference-dependency is argued. The dependency essentially works as a centrifugal force, mitigating the “overpopulation” of the industrialized region, if it is correctly recognized. However, when people have localized reference (incomplete information), or the preference is of the type often assumed in prospect theory, the force is weakened.

Keywords: Reference-dependent preference; Harris–Todaro model; Migration; Income disparity (search for similar items in EconPapers)
JEL-codes: D9 J6 R2 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s12076-020-00261-2

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