Rural-to-urban migration in developing economies: characterizing the role of the rural labor supply in the process of urban agglomeration and city growth

Abstract

This paper aims to contribute to the literature on rural-to-urban migration in developing economies by shedding more light on the hitherto little-investigated linkage between the rural sector and the process of urban development. To this end, we combine existing spatial rural-to-urban migration frameworks and extend them by including some key assumptions of the urban development theory. Specifically, we construct a dynamic rural-to-urban migration model in which the links between the urban and rural areas are modeled using the spatial variables of rural land rents and an urban productivity spillover, in order to investigate the contribution of the rural labor supply to urban agglomeration and city growth. The results of our model indicate that rural land rents affect the optimal level of urban agglomeration in scenarios of both unplanned and planned migration, and that the city planner’s solution of optimal agglomeration may not necessarily be inferior to the market solution. In addition, we find that due to their impact on rural workers’ incomes, the spatial variables exert an influence on the steady-state level of growth to which the urban economy can converge. Our study bears policy implications, including the need for city planners to consider spatial variables in order to achieve the desired trade-off between city growth and urban agglomeration.