Borres - Case Study Analysis Chapter 7.doc - Erica C Borres...

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Erica C. Borres BSAIS - 3 Case 7 Rural-Urban Migration and Urbanization in Developing Countries: India and Botswana I – Facts about the Case Most urban growth is taking place in developing world and it is very rapid with a lot of implications and most of the migrants from rural areas account for almost half of growth in urban areas. Any economic or social policy that affects rural and urban incomes will influence migration; this, in turn, will affect sectoral and geographic economic activity, income distribution, and even population growth. Urban modern-sector earning is much higher than rural earnings, which may in turn be even higher than urban traditional-sector earnings. Migration occurs until average or expected rather than actual incomes are equal across regions, generating equilibrium unemployment or underemployment in the urban traditional sector. Extensive rural-urban migration generates social costs for crowded cities, while excessive migration also imposes external costs on the rural areas emptied of better-educated, more venturesome young people as well as external costs on urban infrastructure and lost output. INDIA: o There is a sharp inequality between residents with modern-sector jobs and those working in the informal sector. o After controlling human capital variables, they were left with earnings in the formal sector 9% higher than in the informal sector. o Banerjee found that the idea of segmented formal-informal rural labor markets could be substantiated statistically. o They found that mobility from the informal to the formal sector was low: there was little evidence that more than a very small minority of informal-sector workers were actively seeking jobs in the formal sectors.

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