Where to create jobs to reduce poverty: cities or towns?

Luc Christiaensen, Joachim De Weerdt and Ravi Kanbur

No 587947, Working Papers of LICOS - Centre for Institutions and Economic Performance from KU Leuven, Faculty of Economics and Business (FEB), LICOS - Centre for Institutions and Economic Performance

Abstract: Should public investment be targeted to big cities or to small towns, if the objective is to minimize national poverty? To answer this policy question we extend the basic Todaro-type model of rural-urban migration to the case of migration from rural areas to two potential destinations, secondary town and big city. We first derive conditions under which a poverty gradient from rural to town to city will exist as an equilibrium phenomenon. We then develop sufficient statistics for the policy decisions based on these income parameters. The empirical remit of the model is illustrated with long running panel data from Kagera, Tanzania. Further, we show that the structure of the sufficient statistics is maintained in the case where the model is generalized to introduce heterogeneous workers and jobs.

Keywords: Secondary Towns versus Big Cities; Poverty Reduction; Poverty Gradient; Todaro Model; Migration Equilibrium; Equilibrium Income Distribution (search for similar items in EconPapers)
Date: 2017-04
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Published in IGC Working paper series C-40300-TZA-1 , pages 1-24

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Related works:
Journal Article: Where to create jobs to reduce poverty: cities or towns? (2019)
Working Paper: Where to Create Jobs to Reduce Poverty: Cities or Towns? (2017)
Working Paper: Where to create jobs to reduce poverty: cities or towns ? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:licosp:587947

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