Migration in Less Developed Countries: Comment
the March 1969 issue of the
Michael Todaro formulated “an economic behavorial model of rural-urban
migration” (p. 138) to serve as a framework in the analysis of the
employment effects of alternative economic policies. While Todaro and John
Harris have elaborated upon and expanded the model (1970), the basic model
originally developed by Todaro remains essentially unaltered. It is the purpose
of this communication to call attention to some of the shortcomings in
Todaro’s basic model and to take issue with the policy recommendations
which he has derived from it.
to the labour migration model formulated by Torado is the comparison by the
potential migrant of the present value of expected income streams from
employment in the rural and urban areas. When the present value of the expected
urban real income stream exceeds that of the rural income stream (or
focus of attention is on rural to urban migration, which is the prevalent
historical and present trend. (1) However, the model is essentially reversible,
although asymmetrically as a scalar proxy, a > 1, for "city lights" and
other amenities is included in the calculation of net urban real income.
Similarly, while no definition of the term "potential migrant" is offered, it
is, in theory, applicable to all workers, whether rural or urban. All workers
are potential migrants and all potential migrants are homogeneous, as may be
observed from the following assumptions: all workers have identical planning
horizons, have identical fixed costs of migration, and use identical discount
factors, which are constant over the planning horizon. (Todaro:1969, p. 141).
Workers are also homogeneous in the economic sense of being unskilled. However,
these unskilled workers are assumed to be able to shift without retraining from
the rural sector to either the urban "traditional" sector or the urban "modern"
would appear more realistic to assume that the planning horizon is more likely
to be the same for workers within the same age bracket. Empirical evidence
amply demonstrates that the average age of migrants is well below the average
for the labour force as a whole. (2) Fixed costs of migration, on the other
hand, are likely to vary directly with family size and with the distance from
the worker's present location to the contemplated destination. The use of a
constant rate for discounting future earnings is also subject to challenge.
What of the migrant who attaches greater importance to the opportunities for
his sons' improved economic and social situation rather than his own or the
migrant who is willing to forego higher immediate earnings in rural employment
in order to acquire skills for which training is available only in urban areas?
A method which heavily discounts remote earnings cannot adequately explain the
behaviour of these individuals.
the calculations made by the model’s potential migrant, the expected
value of urban real income, E[Y
in period t varies directly with p
the probability of having a modern sector job in that period (Todaro:1969,
represents the net urban modern sector real income in period t.
lower the probability that the potential migrant will be absorbed in the modern
sector, the less likely it is that he actually will migrate. Thus the rate of
flow of migrants from rural areas and urban unemployment rates are both
equilibrated by the effect of p
on the expected value of urban income. The probability variable p
is, in turn, directly related to the probability p
of having been selected from the pool of urban traditional workers in that
period or any previous period. This latter probability is empirically
determinable, being a ratio between the modern sector job openings in period t
relative to the number of accumulated job seekers in the urban traditional
sector. In fact, however, the potential migrant, not possessing perfect
knowledge, is likely to overestimate the numerator and underestimate the
denominator of the job selection fraction ¶
with a consequent overestimate of the present value of urban income.
his otherwise rigourous model, Todaro does not precisely define the urban
traditional sector, but notes that it includes “the overtly unemployed,
the underemployed or sporadically employed, and those who grind out a meagre
existence in petty retail trades and services”. (1969, p. 139) With the
exception of the overtly unemployed, all others receive some income. However,
employment in the urban traditional sector is regarded in equation (1) as if it
provided no income whatsoever. Excluding overt unemployment from the definition
of the urban traditional sector we may rewrite equation (1) as follows:
is the probability of having an urban traditional sector job in period t, and
represents the net urban traditional sector real income in period t.
is my contention that the urban traditional sector does not merely provide a
positive income, but is likely to be more remunerative on the average than
rural underemployment, the latter being the prospect facing many rural workers.
as modern sector employment largely requires semi-skilled and skilled workers, p
for the unskilled migrant is likely to be extremely low. (3) Indeed, there may
be little chance of obtaining modern sector employment within the planning
horizon of the unskilled worker. If, nonetheless, the worker not only decides
to migrate, but also decides, after a period of acclimatization, to remain in
the urban area, (4) then we may conclude that the present value of the expected
income stream from urban traditional employment (which includes an adjustment
by a>1, the scalar proxy for city lights) is at least comparable to that
from rural employment. (5)
on the average urban traditional employment is more lucrative than rural
employment and if the probability of overt unemployment is relatively small,
then an alternative explanation must be sought to explain why cities have not
grown even more rapidly through internal migration. The answer may well rest in
non-economic factors (Balán: 1969). (6)
(1) leads Todaro to suggest that "one could easily conceive of a situation in
which the urban-rural real income differential .... was positive, while the
'expected' differential .... was negative". (1969, P. 142). Equation (2) leads
me to suggest that this occurs infrequently and hence rural-urban migration is
less readily equilibrated than the Todaro model suggests. Nor can one
necessarily rely on changes in the domestic terms of trade between
manufacturing and agriculture to reduce the expected urban-rural income
differential as increases in the price of wage goods are likely to lead to
price controls and/or the free importation of foodstuffs.
disagreeing with portions of Todaro's analysis, I concur with his general
conclusion that the urban-rural earnings differential should be lowered.
However, I do not agree with Todaro (1969, p. 146), Lloyd Reynolds (1965, p.
39), and others who suggest that this suppressing wage increases in the urban
modern sector. What is called for are efforts to increase the articulation
between the urban and rural sectors of the economy and to engage in precisely
that which Todaro decries, i.e. the "premature mechanization" of agriculture
(1969, p. 146). It is investment in agriculture, with its relatively short
gestation period and low capital-output ratio which offers the best prospect
for narrowing the urban-rural earnings differential through its effect on the
output and price of wage goods. Investment in agriculture is likely to be far
more effective in reducing the earnings differential and more feasible
politically than the combination of an incomes policy with measures to induce
more efficient use of
capital resources in agriculture that Todaro recommends (1969, p. 146).
mechanization of agriculture is criticized by Todaro because of the problems it
poses for rural labour absorption. However, mechanization generates employment
in such related activities as transportation, commerce, communications.,
finance, administration and maintenance. Werner Baer and Michel Hervé
have argued that “modern industry requires a substantial service sector
in order to function”. (1966, p. 104) Modern agriculture also requires a
substantial service sector.
acknowledges t1int material progress has historically been accompanied by a
transfer of labour from rural to urban areas, yet he envisions the slowing or
reversing of this trend by "bringing 'city lights' to the countryside". (1969,
p. 149) W.A. Lewis in answering the question "Is Economic Growth Desirable?",
places the increase in the range of human choice at the head of his list of the
advantages of growth (1955, p. 420). Is it not the increase in the range of
choice that is at the heart of urbanization? One may be able in some measure to
bring city lights to the countryside, but it can hardly be expected to
substitute for the diversity found in urban areas. It is as unlikely that the
desire for urban living can be overcome as it is that the desire for economic
development itself can be overcome. Rather than recommending the reversal of
historical trends, it would seem more fruitful were economists to concentrate
on policies by which these trends could be turned to developmental advantage.
of the model would be necessary to accommodate migration between urban areas or
between rural areas. Urban to urban migration is of particular importance in
Latin America where migration to large cities comes primarily from either
secondary urban centers or towns rather than farms (Herrick:1965 and
Mangin:1967, p. 69).
economically active recent migrants to Santiago, Chile in a sample studied by
Bruce Herrick, 31.3 percent had come between the ages of 16-20, while 63.9
percent were between the ages of 16-30 at the time of migration (1965, p. 76).
of having been selected from the pool of urban unskilled traditional workers is
more properly a ratio between the job openings in the modern sector for
unskilled workers and the size of the pool of unskilled.
Latin America, where population pressure on the land is largely absent,
migration back to the land is relatively small (Mangin:1967, p. 89).
potential migrants may also adjust expected rural real income b<1, a scalar
proxy for "rural hardship".
is possible that for some rural workers the urban and rural scalar proxies are
reversed, such that a<1 and b>1.
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Theory of Economic Growth
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Vol. 59, March 1969, pp. 138-148.
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