Environmental disparities in an urban area, rural–urban migration, and urban unemployment

Abstract

The environment is not always uniform for all of the residents of a specific region. This study explicitly incorporates this aspect into a general equilibrium model of rural–urban migration with urban unemployment. Pollution from the urban manufacturing sector is assumed to have a negative externality on urban residents’ utility. Moreover, this study assumes that in an urban area, the effects of pollution on employed and unemployed workers are different. Thus, disparities in the environment develop for the residents within that area. Rural–urban migration is assumed to occur according to a rural–urban difference in expected utilities. This study performs a comparative static analysis. It is shown that, in an urban area, a decrease in the effect of pollution on an employee (unemployed worker) increases his/her utility; however, it decreases an unemployed worker’s (employee’s) utility.