Labor Migration, Consumption Scale Economies and Income Variance

Raul Fabella and Dante Canlas
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Dante Canlas: School of Economics, University of the Philippines Diliman

No 199005, UP School of Economics Discussion Papers from University of the Philippines School of Economics

Abstract: Katz and Stark (1986) have proposed two reasons for rational workers to migrate to urban areas even when the urban expected income is lower than rural income. We propose to more, viz., scale economies in consumption and differential income variance in favor of the urban area. In each case, global risk aversion is retained.

Date: 1990-04
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Published as UPSE Discussion Paper No. 1990-05, April 1990

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