Migration, Unemployment and Development: A Two-Sector Analysis

Throughout mnany less developed economies of the world, especially those of tropical Africa, a curious economic phenomenon is presently taking place. Despite the existence of positive marginal products in agriculture and significant levels of urban unemployment, rural-urban labor migration not only continues to exist, but indeed, appears to be accelerating. Conventional economic models with their singular depeindence on the achievement of a full employment equilibrium through appropriate wage and price adjustments are hard put to provide rational behavioral explanations for these sizable and growing levels of urban unemployment in the absence of absolute labor redundancy in the economy as a whole. Moreover, this lack of an adequate analytical model to account for the unemployment phenomenon often leads to rather amorphous explaniations such as the "bright lights" of the city acting as a magnet to lure peasants into urban areas. In this paper we shall diverge from the usual full employment, flexible wage-price models of economic analysis by formulating a two-sector model of rural-urban migration which, among other things, recognizes the existence of a politically determined minimum urban wage at levels substantially higher than agricultural earnings.' We shall then consider the effect of this parametric urban wage on the rural individual's economic behavior when the assumption of no agricultural labor surplus is made, i.e., that the agricultural marginal product is always positive and inversely related to the size of the rural labor force.2 The distinguishing feature of this model is that migration proceeds in response to urban-rural differences in expected earnings (defined below) with the urban employment rate acting as an equilibrating force on such migration.3 We shall then use the overall model for the following purposes: 1) to demonstrate that given this po-