Connecting Lagging and Leading Regions: The Role of Labor Mobility

25 Pages Posted: 20 Apr 2016

See all articles by Somik V. Lall

Somik V. Lall

World Bank

Christopher Timmins

Duke University - Department of Economics

Shouyue Yu

Duke University

Date Written: February 1, 2009

Abstract

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.

Keywords: Transport Economics Policy & Planning, Population Policies, Banks & Banking Reform, Labor Policies, Access to Finance

Suggested Citation

Lall, Somik V. and Timmins, Christopher D. and Yu, Shouyue, Connecting Lagging and Leading Regions: The Role of Labor Mobility (February 1, 2009). World Bank Policy Research Working Paper No. 4843, Available at SSRN: https://ssrn.com/abstract=1348984

Somik V. Lall (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/slall

Christopher D. Timmins

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1809 (Phone)
919-684-8974 (Fax)

Shouyue Yu

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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