Migration and development

Abstract

The objective of economic development has long been seen to be to create jobs in the formal urban sector of the economy and to induce the migration of labour from the agricultural (rural) to the non-agricultural (urban) sector. In this study we argue that the creation of more jobs in the formal sector can result in expanding the low productivity informal sector as well when migration is a response to the small possibility of obtaining a high-wage formal sector job along with the good prospects of a low-wage informal sector job dominating the income earned from agriculture. Productivity enhancing land-augmenting investments in agriculture are then a necessary requirement for migration to be associated with favourable outcomes.