Journal
JOURNAL OF ECONOMIC INEQUALITY
Volume 17, Issue 4, Pages 543-564Publisher
SPRINGER
DOI: 10.1007/s10888-019-09419-5
Keywords
Secondary Towns versus big cities; Poverty reduction; Poverty gradient; Todaro model; Migration equilibrium; Equilibrium income distribution; O18; O41; I3; J61
Categories
Funding
- Excellence of Science (EOS) Research Project at the Research Foundation - Flanders (FWO) [30784531]
- World Bank
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Should job creation be targeted to big cities or to small towns, if the objective is to minimize national poverty? To answer this question, we develop an equilibrium model of migration from rural areas to two potential destinations, small town and big city. We develop sufficient statistics for policy decisions based on the parameters of the model. The empirical remit of the theoretical 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.
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