The Effect of Relative Income in the Dynamics of Migration: Evidence from the VHLSS Panel Data

Abstract

This paper examines, within the Vietnamese context, the role of relative deprivation, as proposed by Stark (1984) and Stark and Taylor (1989, 1991), in the dynamics of internal migration. The conventional wisdom in the economics of migration literature, such as the model of Harris and Todaro (1970), holds that as the rural-urban income gap widens, the influx of migrants from rural to urban areas increases until equilibrium is reached. The absolute income gap is of the utmost importance in the decision-making process concerning migration in that model. On the other hand, Stark (1984) hypothesizes that household members undertake migration not necessarily to increase the household’s absolute income but rather to improve the household’s position (in terms of relative deprivation) with respect to a specific reference group.