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Dynamics of Rural—Urban Migration in a Developing Economy

This paper introduces agglomeration economies into the Harris—Todaro model of rural—urban migration in a developing economy. With the assumption of agglomeration economies in the urban sector, our model is able to explain the dynamic process of migration, starting from a ‘rural-economy’ equilibrium and moving towards an ‘urban-economy’ equilibrium. It is shown that higher expectations about urban wages and employment, beyond a certain limit, will give rise to a sudden change in the dynamic property of the economy, causing it to move from a ‘rural’ equilibrium to an ‘urban’ equilibrium.