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Where to Create Jobs to Reduce Poverty: Cities or Towns?

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  • Christiaensen, Luc
  • De Weerdt, Joachim
  • Kanbur, Ravi

Abstract

Should public investment be targeted to big cities or to small towns, if the objective is to minimize national poverty? To answer this policy question the authors extend the basic Todaro-type model of rural-urban migration to the case of migration from rural areas to two potential destinations, secondary town and big city. The authors first derive labor income, migration cost and poverty line conditions under which a poverty gradient from rural to town to city will exist as an equilibrium phenomenon. The authors then develop sufficient statistics for the policy decisions based on these income parameters. The empirical remit of the model is illustrated with long running panel data from Kagera, Tanzania. Further, we show that the structure of the sufficient statistics is maintained in the case where the model is generalized to introduce heterogeneous workers and jobs.

Suggested Citation

  • Christiaensen, Luc & De Weerdt, Joachim & Kanbur, Ravi, 2017. "Where to Create Jobs to Reduce Poverty: Cities or Towns?," Jobs Group Papers, Notes, and Guides 27488489, The World Bank.
    • Handle: RePEc:wbk:jbsgrp:27488489
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    6. Gibson, John & Jiang, Yi & Susantono, Bambang, 2023. "Revisiting the role of secondary towns: How different types of urban growth relate to poverty in Indonesia," World Development, Elsevier, vol. 169(C).
    7. John Gibson & Yi Jiang & Bambang Susantono, 2022. "Revisiting the role of secondary towns: Effects of different types of urban growth on poverty in Indonesia," Working Papers in Economics 22/05, University of Waikato.
    8. Mulubrhan Amare & Kibrom A. Abay & Channing Arndt & Bekele Shiferaw, 2021. "Youth Migration Decisions in Sub‐Saharan Africa: Satellite‐Based Empirical Evidence from Nigeria," Population and Development Review, The Population Council, Inc., vol. 47(1), pages 151-179, March.

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    More about this item

    Keywords

    model of labor migration; poverty head count; degree of risk aversion; national income distribution; cost of migration; family and friends; number of jobs; national poverty line; difference in income; panel data set; employment and unemployment; efficiency of investment; consumption per capita; average income gain; informal sector employment; special economic zone; intergovernmental fiscal arrangement; labor market model; benefits of migration; analysis of poverty; cost of employment; information on migration; poverty gap measure; urban informal sector; degree of poverty; high poverty line; rural area; modern sector; Job Creation; Rural Sector; job generation; employment rate; migration costs; policy question; empirical relevance; rural population; informal city; equilibrium value; poverty reducing; rural income; poverty index; urban sector; rural-urban migration; informal employment; Basic Education; population share; urban investment; equilibrium condition; unemployment rate; density function; equilibrium outcome; secondary city; migration streams; urban location; poverty outcome; basic structure; migration destination; rural hinterland; migration decision; Political Economy; wage gap; relative value; empirical support; poverty impact; relative poverty; global poverty; wage inequality; median income; migrant flow; search cost; seasonal migration; sector analysis; Economic Mobility; cities alliance; human migration; wage set; dual economy; urban unemployment; data issue; income profile; poverty effect; high probability; empirical example; migration literature; cost differential; development theory; destination location; private incentives; exogenous parameter; risk neutrality; basic model; skill acquisition; previous work; migration pattern; Informal Jobs; parameter value; consumption datum; attrition rates; wage employment; rural employment; income data; discount factor; income parameter; declining poverty; rural migrant; empirical literature; policy stance; employment generation; Urban Governance; transportation cost; education level; labor income; open access; development policy; national population; income differential; moving parts; poverty comparison; poor household; income range; international community; adult equivalent; consumption variable; measurement error;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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