Ethiopian Civil Service University

Rural-Urban Development
MDM5061

Chapter Seven - Rural –Urban

Migration
May 2022
 Chapter Seven
CHAPTER 7: RURAL-URBAN MIGRATION
7.1. The Migration and Urbanization Dilemma
7.2. Role of Cities in Development
7.3. The Role of Informal Sector in the Migration Process
7.4. Model of Rural-Urban Migration
7.4.1. Todaro Migration Model
7.4.2. Policy Implications of Migration Model
7.5. A Compressive Migration and Employment Strategies
7.6. Women in Urban Informal Sector
The Migration and Development
Migration and the urbanization dilemma
■ Migration is the movement of people from one place to another with the intention
of settling permanently or temporarily.
■ Migration is the demographic process that links rural to urban areas, generating or
stimulating the growth of cities.
– The resultant urbanization is linked to a variety of policy issues, spanning demographic,
economic, and environmental concerns
■ As a pattern of development, the more developed the economy, the more urbanized
– But many argue developing countries are often excessively urbanized or too-
rapidly urbanizing
■ This combination suggests the migration and urbanization dilemma
 Urban Population and Per Capita Income
• Urbanization and Development across Selected Countries
• The positive association between
urbanization and per capita income is
one of the most obvious and striking
“stylized facts” of the development
process.
• Generally, the more developed the
country, measured by per capita
income, the greater the share of
population living in urban area
• So we need to consider urbanization
carefully—
• is it only correlated with economic
development, or is causation also
at work?
 People using at least basic sanitation services
Population in the
Urban population
largest city
Countries/regions urban Rural
% of total % of urban
thousands % growth % of urban population % of rural population
population population
1990 2018 1990 2018 2018 1990 2016 2000 2017 2000 2017
Botswana 540 1,565 42 69 3.3 .. .. 68.8 89.4 32.7 50.6
China 300,166 823,828 26 59 2.5 3 3 77.5 90.8 44.4 76.4
Egypt, Arab Rep. 24,406 42,031 43 43 2 41 48 95.1 98.3 90.1 91.1
Ethiopia 6,044 22,678 13 21 4.8 30 20 16 19.6 1.2 4.2
Ghana 5,384 16,687 36 56 3.4 22 18 14 23.7 4.3 11.9
India 223,096 460,296 26 34 2.3 6 6 49.3 72 3.8 53.2
Kenya 3,973 13,892 17 27 4.1 35 32 35.7 34.7 33.1 27
Malawi 1,087 3,073 12 17 4 34 33 32 34.1 18.9 24.7
Nigeria 28,259 98,611 30 50 4.2 17 14 30.1 47.8 29.2 30.7
Senegal 2,927 7,482 39 47 3.7 47 41 63.1 65 22.6 39.6
South Africa 19,150 38,340 52 66 2.1 11 14 71.1 76.3 42.5 74.7
Sudan 5,764 14,481 29 35 3.2 41 39 40.5 60.1 11 24.2
Uganda 1,922 10,157 11 24 6.2 39 30 30.6 26.1 15.1 16.2
Zimbabwe 3,024 4,651 29 32 1.3 35 33 65 46.2 36.2 31.5
World 2,271,139 4,195,080 43 55 1.9 17 16 77.5 84.4 34.3 58.7
Latin America & Caribbean 312,289 516,335 71 81 1.2 25 23 82 91.3 46.4 68.5
Middle East & North Africa 139,667 293,463 55 65 2.2 28 26 90.6 94.1 71.4 81.2
South Asia 284,109 616,754 25 34 2.5 10 11 50.8 70.5 8.1 52.8
Sub-Saharan Africa 139,407 433,229 27 40 4.1 29 27 36.9 44.9 16.6 21.7
Low income 74,941 214,250 25 33 3.9 36 32 38 46 15 21.9
Upper middle income 915,753 1,859,597 42 66 1.9 14 12 80.9 91 47.4 76.3
High income 758,498 994,964 74 81 0.7 20 19 99 99.3 96.2 97.7
Proportion of Urban Population by Region, 1950-2050 Urbanization across Time and Income Levels
Megacities: Cities with Ten Million
or More Inhabitants
Urbanization and development
■ the speed at which the share of urban
population has increased in developing
countries in the late 20th and early 21st C.
– is not much faster than in many of the
developed countries when they were
urbanizing in the late nineteenth century,
particularly in Africa, at lower levels of
per capita income than at a comparable
stage in developed countries
– urbanization in Africa is not associated
with industrialization, as it was in the
now-developed countries.
– In most regions of the developing world,
because population is so much larger, the
total numbers of people coming into the
city is unprecedented at such low levels
of income per capita.
 Stages of Urbanization

Initial Stage Transition Stage Terminal Stage

100 Demographic transition

Rural to urban migration

Developed countries
80
Urban Population

Rural Developing Urban

60 countries
Society Society
40
Least developed
countries
20
Urbanization
0
Source: Adapted from Peters and Larkin, Population Geography, 1999.
Time
9
 The Role of Cities
■ Agglomeration/accumulation economies – positive benefits of economic activities that firms obtain from
being located in close proximity with those engaged in similar businesses or interests (cities provide cost
advantages to producers and consumers) – two forms
– Urbanization (general) economies – agglomeration effects captured by all sectors of an economy as a
result of the general growth of a concentrated geographic region
– Localization (industry or service) economies - agglomeration effects captured by particular sectors of
economy (take form of forward and backward linkages)
- forward linkage – users of outputs of an industry reduce their transpiration costs by locating near by to the industry; they can also
easily find a new job
- backward linkage – firms of the same or related industries may benefit from being located in the same city
– Saving on firm-to-firm, firm-to-consumer
– Transportation
– Firms locating near workers with skills they need
– Workers locating near firms that need their skills
– Firms benefit from (perhaps specialized) infrastructure
– Firms benefit from knowledge spillovers in their and related industries
– (consumers may benefit from urban amenities)
■ Urban bias - the notion that most governments in developing countries favour the urban sector in their
 Industrial Districts and Clustering
■ Industrial districts – firms doing similar works and located around one place.
■ Quality of clusters, or Industrial Districts, is a key to sectoral efficiency
– Unfortunately a majority of developing countries have made only limited progress
■ China: has made huge strides in generating industrial districts over the decades
■ Urbanization Costs and Efficient Urban Scale
■ But, cities entail “congestion costs” – due to increase in urban density
– Economically efficient urban scale (from point of view of productive efficiency) - average costs for
industries are lowest
– congestion costs - action taken by one agent that decreases the incentives for other agents to take
similar actions.
– there are fewer productivity benefits for unrelated industries to locate together.
– But, there is the potential spill over from technological progress in one industry to its adaptation for
different uses in another industry
■ Generally, differing efficient scales for different industrial specializations imply different city sizes
– More extensive (expensive) capital, infrastructure required in urban areas
– Smaller cities may be expected in labor-intensive developing countries
 Industrial Districts and Clustering
Benefits of industrial districts:
■ Passive collective efficiency ---location
- they can learn from each other
- marketing advantages
■ Active collective efficiency -----collective action
- Lobbying the government for needed infrastructure as an industry rather than
as individual firms
- Developing training facilities

12
 The Urban Giantism Problem
■ occurs when capital cities or other “urban giants” suffer from enormous levels of
congestion, but adequate mid-size cities that might provide alternative locations for
growth are lacking the problem of congestion.
■ There may be general urban bias
– Cities are capital intensive so may expect large cities commonly located in developed countries
– But urbanization in developing countries has taken place at unexpectedly rapid pace
– Huge informal sectors in shanty towns
– Large fraction of workers outside formal sector
– Much urban growth is in mid-size cities, but urban bias remains a serious issue in many developing
countries
– There may be First-City Bias (favoring largest city)
■ Causes of Urban Giantism:
– Import substitution industrialization: less trade, incentive to concentrate in a single city largely to avoid
transportation costs
– “Bread and circuses” to prevent unrest (evidence: stable democracies vs unstable dictatorships)
– Hub and spoke transportation system (rather than web) makes transport costs high for small cities
–
Population of the Largest and Second- Politics and Urban Concentration
Largest Cities in Selected Countries
(millions)
The Urban Informal Sector
■ Why promote the urban informal sector?
– Generates surplus despite hostile environment
– Creating jobs due to low capital intensively
– Access to (informal) training, and apprenticeships
– Creates demand for less- or un- skilled workers
– Uses appropriate technologies, local resources
– Recycling of waste materials
– More benefits to poor, especially women who are concentrated in the informal
sector
Importance of Informal Employment in Selected Cities
Youth Unemployment Rates, 1995 and 2005
Migration and Development Components of Migration in
Selected Countries
■ Rural-to-urban migration was viewed
positively until recently
■ The current view is that this migration is
greater than the urban areas’ abilities to
– Create jobs
– Provide social services
■ Factors affecting African urbanization
■ Rural Push Factors
– More poverty
– Less work opportunities
– Limited education opportunities
– Fewer medical facilities
– Environmental problems
■ Urban Pull Factors
– possibilities of jobs
– better education
– better medical
■ Generally, the Sub-Saharan African migration is more of driven by push factors than pull factors.
Toward an Economic Theory of Rural-Urban Migration
■ A Verbal Description of the Todaro Model
– Migration is a rational decision
– The decision depends on expected rather than actual wage differentials
– The probability of obtaining a city job is inversely related to the urban
unemployment rate
– High rates of migration are outcomes of rural urban imbalances
■ Todaro migration model - A theory that explains rural-urban migration as an
economically rational process despite high urban unemployment. Migrants
calculate (present value of) urban expected income (or its equivalent) and move
if this exceeds average rural income.
■ Harris-Todaro model - An equilibrium version of the Todaro migration model
that predicts that expected incomes will be equated across rural and urban
sectors when taking into account informal sector activities and outright
unemployment
A Diagrammatic Presentation
Schematic Framework for Analyzing
the Rural-to-Urban Migration
Decision
 The Harris-Todaro Migration Model

LM
WA  (W M )
LUS

Where
WA is agricultural income,
LM is employment in manufacturing
LUS is total urban labor pool
WM is the urban minimum wage
The Harris-Todaro Migration Model

Todaro migration model has four basic characteristics

1. Migration is stimulated primarily by rational economic considerations of
relative benefits and costs, mostly financial but also psychological.
2. The decision to migrate depends on expected rather than actual urban rural
real-wage differentials where the expected differential is determined by the
interaction of two variables, the actual urban-rural wage differential and the
probability of successfully obtaining employment in the urban sector.
3. The probability of obtaining an urban job is directly related to the urban
employment rate and thus inversely related to the urban unemployment rate.
4. Migration rates in excess of urban job opportunity growth rates are not only
possible but also rational and even likely in the face of wide urban rural
expected income differentials. High rates of urban unemployment are therefore
inevitable outcomes of the serious imbalance of economic opportunities
between urban and rural areas in most underdeveloped countries
Toward an Economic Theory of Rural-Urban Migration
(cont’d)
■ Five Policy Implications
i. Reduction of urban bias
ii. Imbalances in expected income opportunities is crucial –
 The traditional (Keynesian) economic solution to urban unemployment with the creation
of more urban modern-sector jobs without simultaneous attempts to improve rural
incomes and employment opportunities can result in higher levels of urban
unemployment
iii. Indiscriminate educational expansion fosters increased migration and
unemployment
iv. Wage subsidies and scarcity factor pricing can be counterproductive
 Because actual urban wages generally exceed the market or “correct” wage as a result
of a variety of institutional factors, it is often argued that the elimination of wage
distortions through price adjustments or a subsidy system will encourage more labour-
intensive modes of production - they can also lead to higher levels of unemployment
v. Programs of integrated rural development should be encouraged
 A Comprehensive Migration and Employment Strategy

■ Create a urban-rural balance

■ Expand small-scale, labor intensive industries
■ Eliminate factor price distortions
■ Choose appropriate labor-intensive technologies of production
■ Modify the linkage between education and employment
■ Reduce population growth
■ Decentralize authority to cities and neighborhoods
Migration refers to
population movements
taking place from 2008-12.
Source: Labour Force
Survey (2013), adapted from
Schmidt et al. (2018).