Case Study 7 - Rural-Urban Migration and Urbanization in Developing Countries: India and Botswana

Question 1

introduction

Answer 1

• urban population growth is much faster in the developing world, with rural-to-urban migration accounting for about half of this growth
• unchecked urbanization in developing countries strains infrastructure, public health systems, and social stability
• shantytowns make up over one third of urban residences in these regions
• around half of the urban workforce is in informal, low-skilled, low-productivity jobs, which still contribute significantly to urban income
• migration is influenced primarily by urban-rural income differences as highlighted by Todaro and Harris-Todaro models
• migration is individually rational, driven by expected rather than actual earnings, but can result in equilibrium unemployment or underemployment in urban areas
• extensive rural-urban migration imposes social costs on crowded cities and external costs on rural areas, including the loss of educated and enterprising individuals
  -urban infrastructure faces challenges from the growing population and migration pressures
• policies to reduce rural-to-urban migration include rural development, education, and technology choices aimed at boosting rural income opportunities
• urban development policies seek to manage migration’s pace and pattern to optimize benefits and minimize costs
• India, with its vast population and migration potential, highlights the scale of urban challenges
• Botswana exemplifies rapid urbanization in sub-Saharan Africa, showcasing lessons and successes that may inform broader policies

Question 2

India

Answer 2

• Delhi’s population surged
• there is a notable wage gap between formal and informal sectors, which formal sector wages being higher
• movement from the informal to the formal sector is limited
• entry into formal jobs often relies on personal contacts, which many informal workers lack
• many migrants aim from informal-sector jobs, such as domestic work, construction, and sales
• migrants are often driven by economic factors and maintain close ties to their rural origins through remittances and visits
• the duration of unemployment post-migration is short
• Banerjee’s findings suggest expanding traditional migration models to include informal sectors with varying wage levels
• migration often reflects expectations of better opportunities, even if actual gains are modest
• families may use migration as a portfolio diversification strategy to reduce income risks, sending members to various locations
• better access to formal-sector opportunities, skill development, and breaking down barriers between formal and informal sectors could improve outcomes for migrants

Question 3

Botswana

Answer 3

• rural migrants moved to urban centers within Botswana
• urban earnings were much higher than rural earnings for males, but became less pronounced when adjusted for schooling and experience
• migration likelihood increases with higher expected earnings and employment probabilities in urban centers
• conversely, higher wages and better job prospects in home villages lower the chances of migration
• these findings strongly support Todaro’s migration hypothesis
• creating one urban job attracted more than one rural migrant, demonstrating the Harris-Todaro effect
• earnings rose significantly the longer migrants stayed in urban areas due to increases in pay rates rather than improved job probabilities
• probabilistic migration models, such as Todaro’s, provide valuable frameworks for explaining rural-to-urban migration
• the study emphasizes the need to incorporate informal sector participation and risks faced by migrants into expanded migration models
• policy makers need to account for migration-driven labor shifts and the dynamics if informal vs formal sector employment when designing development strategies

Question 4

what makes India and Botswana suitable case studies for examining rural-to-urban migration and urbanization?

Answer 4

The two are quite different but show their own individual and unique perspectives of rural-to-urban migration and urbanization. India has a large population in which urban areas are constantly growing. However, there are evident challenges when it comes to how to manage migration with this great urban
development as it has a toll on the current and available service and infrastructure. Botswana is very small in comparison and yet has high economic growth. The country seems to be managing great urbanization well because of their focus on development. So, we can observe the factors that influence migration and urbanization of the two differing countries.

Question 5

why do many migrants to Delhi prefer to enter the informal sector rather than the formal sector, and how do Banerjee’s findings extend to Todaro and Harris-Todaro migration models?

Answer 5

• the informal sector is easier to enter, and the skill levels required are not very high allowing for more flexible work hours
• the formal sector is less accessible to migrants as it requires more qualifications and has stricter regulations
• many migrants prefer the informal sector because of the education and skill requirement gaps needed to enter the formal sector
• these extend the Todaro and Harris-Todaro models by highlighting the role of social networks and flexible work within the informal sector, which appeal more to migrants than paying formal sector job opportunities

Question 6

how do Robert E. B. Lucas’s findings in Botswana support the Todaro and Harris Todaro models, and what insights do they provide about the relationship between pay differentials, migration, and employment outcomes?

Answer 6

• Robert E. B. Lucas’s findings in Botswana supports the Todaro and Harris-Todaro model by confirming that migration is driven mostly by expected earnings and employment possibilities
• his analysis shows that higher urban expected earnings and job prospects increase the likelihood of migration
• while higher rural wages and employment deter, finding that are consistent and significant
• this backs the model’s idea that migrants chase expected income differences, and this leads to urban unemployment
• Lucas also shows that one new urban job attracts more than one migrant in the case study, which aligns with the Harris-Todaro model
• in the case study “Lucas found that unadjusted urban earnings were much higher than rural earnings, 68% higher for males, but these differences became much smaller when schooling and experience were accounted for” and rise overtime due to pay increases, which shows how pay gaps fuel rational migration decisions