Dynamic control of rural-urban migration

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10 Citations (Scopus)

Abstract

This study investigates the optimal urbanization control of an underdeveloped economy by specifying a simple dynamic rural-urban model in which the urban sector bears both an intertemporal positive externality and a simultaneous negative externality. The dynamic optimization problem is solved for the political intervention of the central government in an intersectoral population distribution with taxes and subsidies. Our analysis provides the following results: (i) a big-push policy that leads an economy to a higher-income steady state with urbanization is not necessarily desirable if the government cannot borrow money at a sufficiently low interest rate; (ii) in order to sustain an appropriate urbanization speed, urbanization control policy should have a switch: the urban sector should be subsidized in order to accelerate rural-urban migration in early stages of development, and taxed to decelerate and eventually cease the migration in later stages.

Original languageEnglish
Pages (from-to)196-202
Number of pages7
JournalJournal of Urban Economics
Volume66
Issue number3
DOIs
Publication statusPublished - 2009 Nov 1
Externally publishedYes

Keywords

  • Big-push
  • Optimal urbanization control
  • Rural-urban migration
  • Speed of urbanization

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

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