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Connecting lagging and leading regions : the role of labor mobility, Volume 1
Author:Lall, Somik V.; Timmins, Christopher; Yu, Shouyue; Country:World;
Date Stored:2009/02/23Document Date:2009/02/01
Document Type:Policy Research Working PaperSubTopics:Transport Economics Policy & Planning; Access to Finance; Banks & Banking Reform; Population Policies; Labor Policies
Language:EnglishMajor Sector:Energy and mining; Public Administration, Law, and Justice; Industry and trade; Transportation; Water, sanitation and flood protection
Rel. Proj ID:1W-Rural Urban Migration, Household Welfare And Public Policy -- P107 -- -- P107412;Region:The World Region
Report Number:WPS4843Sub Sectors:General water, sanitation and flood protection sector; Sub-national government administration; General industry and trade sector; General energy sector; General transportation sector
Collection Title:Policy Research working paper ; no. WPS 4843Volume No:1

Summary: How can policies improve the welfare of people in economically lagging regions of countries? Should policies help jobs follow people? Or should they enable people to follow jobs? In most countries, market forces have encouraged the geographic concentration of people and economic activities - policies that try to offset these forces to encourage balanced economic growth have largely been unsuccessful. However, policies that help people get closer to economic density have improved individual welfare. In this paper, the authors examine the migration decisions of working-age Brazilians and find that the pull of higher wages in leading regions has a strong influence on the decision to migrate. However, many people are also "pushed" to migrate, starved of access to basic public services such as clean water and sanitation in their hometowns. Although migration is welfare-improving for these individuals, the economy may end up worse off as these migrants are more likely to add to congestion costs in cities than to contribute to agglomeration benefits. Encouraging human capital formation can stimulate labor mobility for economic gain; and improving access to and quality of basic services in lagging regions will directly improve welfare as well as reduce the type of migration motivated by the search for life-supporting basic services.

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