The Earnings Experience of Rural-Urban Migrants in Korea

Abstract

Migration models in the Harris-Todaro tradition imply that urban informal sector earnings are less than rural sector earnings. Examining the situation for Korea, we find that both urban formal and informal sector earnings exceed earnings opportunities in rural areas, making rural-urban migration the best decision for the individual and for the Korean economy in terms of maximizing output. A Dutch Disease model is offered as an explanation for the unexpected strength of urban informal sector earnings. The implication for policy makers is that government efforts may be better directed toward mitigating the externalities caused by over-crowding, rather than attempting to influence population movements. [J31]

^* The research reported in this paper was partially supported by the Korea Development Institute, Seoul, Korea. Any opinions findings, conclusions or recommendations expressed herein are those of the authors and do not necessarily reflect the views of the Korea Development Institute.

^* The research reported in this paper was partially supported by the Korea Development Institute, Seoul, Korea. Any opinions findings, conclusions or recommendations expressed herein are those of the authors and do not necessarily reflect the views of the Korea Development Institute.

Notes

^* The research reported in this paper was partially supported by the Korea Development Institute, Seoul, Korea. Any opinions findings, conclusions or recommendations expressed herein are those of the authors and do not necessarily reflect the views of the Korea Development Institute.