Policymakers might seek to address the frictions that prevent potentially beneficial migration to urban areas from taking place
Read “Urban-Rural Gaps in the Developing World: Does Internal Migration Offer Opportunities?” by David Lagakos here.
About half of inequality in the developing world is accounted for by whether people live in or out of a city. How should we measure this urban-rural gap, and what can policymakers do about it? In this VoxDevTalk, David Lagakos discusses his new paper which picks apart these difficult but important questions, using Nigeria and India as examples. In terms of measurement, there are clear and tangible urban-rural gaps in areas such as child mortality, education, and housing quality, although aggregating these or other statistics is not straightforward. Comparing prices of anything other than food is also challenging, but the indications are that while prices are more expensive in cities, this is not enough to make up for the urban-rural wage and consumption gaps and migrants to cities experience significant gains on average. He discusses the role of sorting of more educated or able workers into urban areas behind the urban-rural gap, and how informational and other frictions prevent potentially beneficial migration to urban areas from taking place. He advises policymakers to focus on the long-run ‘bread and butter’ issues that will give people the opportunities to improve their human capital and to move to a city where it could be more productive.