Moving to a New Location for Work: How Easy Is It to Get It Right?

Debasis Barik Manjistha Banerji Dinesh Kumar Tiwari

Internal migration of labor (or labor migration) from rural to urban areas was once thought to be a necessary process to meet labor demand at the urban industrial sectors. The classical two-sector migration models assumed that people migrate from less remunerative agricultural sector to the urban industrial sector, where expected rate of labor return was higher (Lewis, 1954; Ranis & Fei, 1961). This process was considered beneficial, since labor force was being shifted from the locations where their marginal productivities were assumed to be zero to the places where they turned not only positive but also were growing rapidly as a result of capital accumulation and technological advancement. These migration models were developed largely in the context of advanced industrial economies where the existence of the full or near-full employment in urban areas were assumed implicitly. The validity of these models starts underperforming once the rural to urban migration rate exceeds the rate of urban job creation. This makes the classical two-sector migration models irrelevant in the context of developing countries, where there remains surplus labor even in the urban centers (Harris & Todaro, 1970; Todaro, 1968, 1969, 1976, 1996). Internal migration in developing countries is often characterized by over-crowding of semi-skilled or unskilled rural labor migrants in the urban work place. Though expected wage rate in the urban is higher than the rural areas, probability of securing a high-paid urban job is much less among the new entrants. Consequently, they either take up casual or part-time jobs or remain unemployed for sometimes (Todaro, 1980).