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A note on migration with borrowing constraints.

S Ghatak, P Levine

    Scandinavian Journal of Development Alternatives
    |December 1, 1994
    PubMed
    Summary
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    Migration in developing countries is often driven by expected income differences. However, this study shows rising rural incomes can increase migration by easing borrowing constraints for potential migrants.

    Area of Science:

    • Development Economics
    • Labor Economics
    • Migration Studies

    Background:

    • Traditional Harris-Todaro models link migration to expected income differentials between regions.
    • Empirical evidence sometimes contradicts this, showing increased migration from areas with rising incomes.

    Purpose of the Study:

    • To resolve the conflict between migration theory and evidence in Less Developed Countries (LDCs).
    • To analyze migration patterns considering imperfect credit markets in LDCs.

    Main Methods:

    • Theoretical analysis of migration determinants.
    • Incorporation of imperfect credit market constraints into migration models.

    Main Results:

    • Demonstrates how rising rural wages can paradoxically increase rural-to-urban migration.
    Keywords:
    Demographic FactorsDemographyDeveloping CountriesEconomic ConditionsEconomic FactorsIncomeMacroeconomic FactorsMigrationMigration, InternalModels, TheoreticalPopulationPopulation DynamicsPopulation TheoryResearch MethodologyRural-urban MigrationSocial SciencesSocioeconomic FactorsWages

    Related Experiment Videos

  • Identifies easing of borrowing constraints as a key mechanism.

    • Conclusions:

    • Imperfect credit markets are crucial for understanding migration in LDCs.
    • Policy interventions affecting rural incomes and credit access can significantly influence migration flows.