Rural-Urban Migration: Urban Unemployment and Rural Urban Disparties in the Philippines

Abstract

In the Harris-Todaro model, a demand-augmenting policy, to the extent that it raises job probabilities, and, hence, the positive urban-rural income differential has the effect of stimulating a higher migration flow from the countryside, even in the face of massive urban unemployment. This papers attempts to verify empirically the validity of the model in explaining Philippine rural-urban migration. The results indicate a strong monotonic relationship between urban-rural income differential and migration propensity, suggesting that urban unemployment have no deterrent effect on rural-urban migration. While urban employment expansion remains a valid policy, it is apparent that output can be increased only if the supply of labor to urban areas is slowed down and reabsorbed in alternative employment in agriculture.