Internal Migration, Structural Change, and Economic Growth
Sirin Saracoglu
Middle East Technical University
Date: Friday 30 November 2012
Hour: 15:00
Place: Natuk Birkan Building, Murat Sertel Lounge
Abstract: Migration of labor out of rural areas and agriculture is a prevalent feature of economic development, growth and structural transformation. Essentially, this process involves the transformation of a rural-agrarian economy to an industrial-service based economy, as labor migrates from agriculture, capital deepening occurs and labor saving technologies are introduced. Not recognized in previous models of this process is the households’ choice, inter-temporally, of urban – rural residency which not only alters the demand for regionally specific goods (e.g., housing, education, health), and hence the cost of living, but also the stock of rural – urban labor which affects the competition for resources within and between the urban – rural economies, and hence the rate of growth and structural change. This is the main contribution of this paper. We investigate the relationship between GDP growth, regional imbalances, and ongoing rural-urban migration over time using a neoclassical multi-region-sector growth model. The household decision for migration is dependent on the cost-of living differentials implied by the relative changes in regional home goods prices across regions as capital deepening occurs and the capital stock within each region evolves. Results show that allowing for residency choice provides a much d
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