Internal Migration Restrictions and Labor Allocation in Developing Countries

Peter Rangazas, Xiaobing Wang

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Abstract

We develop a simple model with endogenous rural–urban migration to analyze the implications of migration restrictions for economic welfare. The model reveals that a combination of an efficient urban bias in public service provision and internal migration restrictions can raise social welfare. Our results suggest that migrations restrictions should be carefully assessed as a policy choice rather than immediately dismissed as suboptimal. However, even when restrictions raise social welfare, they increase urban households’ welfare at the expense of rural households’ welfare, creating an equity tradeoff for policy-makers to consider.
Original languageEnglish
JournalThe Singapore Economic Review
Early online date29 Nov 2017
DOIs
Publication statusE-pub ahead of print - 29 Nov 2017

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