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The Todaro migration model explains rural urban migration as a socially irrational process.
False
The Harris-Todaro migration model assumes that migrants do not consider the present value of urban expected income.
False
The Todaro migration model focuses on the role of social incentives in the decision of workers to migrate.
False
The Harris-Todaro migration model predicts that expected incomes will be unequal across rural and urban sectors.
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The Todaro migration model assumes that there is no visible employment in the urban area.
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The Harris-Todaro migration model is a non-equilibrium version of the Todaro migration model.
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All migrants from rural areas are guaranteed to find a job in the urban area.
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Labor turnover refers to the process of worker retention in the urban modern-sector.
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The efficiency wage is the lowest possible wage rate that employers can offer to workers.
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Urbanization rates decrease when urban population growth exceeds rural population growth.
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There is a negative association between urbanization and per capita income.
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In developed countries, a smaller share of the population lives in urban areas.
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Urbanization is a phenomenon unique to developing countries.
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Labor turnover rates are higher in urban modern-sector employers compared to rural employers.
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Agglomeration effects are associated with the growth of a concentrated geographic region.
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Localisation economies are related to the general growth of a city.
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Forward linkage is when firms of the same or related industries locate in the same city.
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Backward linkage refers to users of outputs of an industry reducing their transportation costs by locating nearby to the industry.
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Industrial districts are clusters of firms of different types.
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Localization economies discourage the emergence of industrial districts.
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Flexible specialization reduces the opportunity to contract out work.
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Alfred Marshall's theory relates to competitive disadvantage.
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Firms can learn from each other regarding production processes, business practices, and rules and regulations in the absence of agglomeration.
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The Sinos Valley in southern Brazil is a region known for its innovative computer software and technology firms.
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Social capital is the productive value of a set of individual institutions and norms.
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Collective action is necessary to achieve all benefits of agglomeration.
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Congestion is an effect where an action taken by one agent increases the incentives for other agents to take similar actions.
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Agglomeration allows firms to turn down big jobs due to lack of capacity.
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Active collective efficiency refers to the benefits of agglomeration that are gained simply by the fact of location.
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Training facilities are easier to develop in isolated areas.
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A hub-and-spoke system is a type of transportation system where the major city is located near the border of the country.
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Urban giantism is a phenomenon where urban settlements grow disproportionately small in size.
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First-city bias is a form of urban bias that benefits the second-largest city in a country.
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Import substitution industrialization leads to the dispersal of population and economic activity across multiple cities.
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The strong association between urbanization and development is explained by agglomeration diseconomies.
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The location of the political capital in the largest city is a common phenomenon in many countries.
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Bread and circuses is a policy used to encourage migration to rural areas.
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Urban giantism leads to a decrease in transportation costs and infrastructure costs.
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Study Notes
Todaro Migration Model
- Explains rural-urban migration as an economically rational process despite high urban unemployment and underemployment.
- Migrants calculate the present value of urban expected income and move if it exceeds average rural income.
Harris-Todaro Migration Model
- An equilibrium version of the Todaro migration model that predicts expected incomes will be equated across rural and urban sectors when taking into account informal-sector activities and outright unemployment.
Urbanization Dilemma
- Urbanization rates increase whenever urban population growth exceeds rural population growth.
- The positive association between urbanization and per capita income is one of the most obvious stylized facts of the development process.
- Generally, the more developed the country, the greater the share of the population living in urban areas.
Urbanization Economies
- Agglomeration effects associated with the general growth of a concentrated geographic region.
- Localization economies often take the form of forward and backward linkages.
Agglomeration Economies
- Benefits of clustering firms of the same type, such as forward and backward linkages.
- Industrial districts emerge, encouraging firms doing similar work to locate near each other.
Industrial Districts
- Firms located in industrial districts benefit from the opportunity to contract-out work easily.
- Firms can learn from each other regarding production processes, business practices, and rules and regulations.
- Training and technological development are easier to develop and adopt.
- Social capital improves, making it easier to resolve shared concerns through collective action.
Congestion
- An action taken by one agent that decreases the incentives for other agents to take similar actions.
- Leads to higher costs of real estate, transportation, and infrastructure.
Urban Giantism
- The phenomenon of urban settlements growing disproportionately large in size due to rapid migration of people from other areas to these urban settlements.
Understanding Urban Giants: Causes and Consequences
- Hub-and-spoke system: the capital city is often located near the outlet of this system on the seacoast.
- Location of the political capital in the largest city.
- Bread and circuses: the first city receives a disproportionately large share of public investment and incentives for private investment.
- First-City Bias: the country's largest city receives a disproportionately large share of population and economic activity.
- Import substitution industrialization: concentration of population and economic activity in a single city, largely to avoid transportation costs.
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Description
Understand the Harris-Todaro migration model, which explains rural-urban migration as an economically rational process despite high urban unemployment and underemployment. This model predicts that expected incomes will be equated across rural and urban sectors.
