Luận văn thạc sĩ UEH rural urban micration and urban unemployment, the case of ho chi minh city

-~·-----

INSTITUTE OF SOCIAL STUDIES
THE HAGUE
THE NETHERLANDS

UNIVERSITY OF ECONOMICS
HO CHI MINH CITY
VIETNAM

VIETNAM- THE NETHERLANDS PROGRAMME
FOR M.A in DEVELOPMENT ECONOMICS

RURAL- URBAN MIGRATION AND URBAN
UNEMPLOYMENT, THE CASE OF HO CHI MINH CITY
r----------·80 GIAO DVC DAO TAO
TRUONG DAI HQC KINH TE TP.HCM

THU~VIEN
.
By

BUI QUY THUAN

\

Ill 6 ~ Lt r

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE OF MASTER OF ARTS IN DEVELOPMENT ECONOMICS

Supervisor: PhD, Professor of Economics Nguyen Thi Canh

HO CHI MINH CITY, JANUARY 2008
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CERTIFICATION

"I certify that the substance of this dissertation has not already been submitted for any
degree and is not currently submitted for any other degree.
I certify that to the best of my knowledge and

h~lp

received m prepanng this

dissertation and all sources used, have been acknowledged in this dissertation."

Signature

Bui Quy Thuan
Date: 20th December 2007

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-----------------------

.-

ACKNOWLEDGEMENTS
I would like to thank more than those respectable name that I will mention following.
Without them, I can not get knowledge as today and this thesis may not even have
existed.
First, I would like to express my special thanks to all organizations and member those
found this programme. All lectures and staff of the project help me having useful
lessons, interesting seminars and new information.
Next, I wish to express sincere appreciation to my academic supervisor PhD,
Professor of economics Nguyen Thi Canh for his helpful guidance and assistance
during the writing of this thesis. I also deeply thank to Nguyen Hoang Bao PhD for
his valuable suggestion and ideals about earlier research design of this thesis, thank to
Mr Danh class 13 in Master of Arts in Development Economic Programme for his
valuable support in extracting database.
Following, I send my thanks to Librarian, Mrs. Nguyen Kim Chi, who helps help me
in finding necessary document and reference books. Thank to Le Thanh Loan PhD
Statistic Office Department of Ho Chi Minh City who provides secondary data for
this thesis. Many thanks go to my classmate, who shared with me joys and hardness
during the time I study in this program.

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ABBREVIATIONS

.

AIDS

Acquired Immune Deficiency Syndrome

FDI

Foreign Direct Investment

HCMC

Ho Chi Minh City

GSO

General Statistics Office

GDP

Gross Domestic Product

MARD

Vietnamese Ministry of Agriculture and Rural Development

MOLISA

Ministry of Labor, Invalids and Social Affairs

MPI

Ministry of Planning and Investment

UNFPA

United Nations Population Fund

UNDP

United Nations Development Program

STis

Sexually Transmitted Infections

UN

United Nations

SOEs

State- Owned Enterprises

VHLSS

Vietnam Living Standards Survey

VND

Vietnam Dong (Vietnamese Currency)

VLSS

Vietnam Household Living Standards Survey

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ABSTRACT
This study explores the link between migration and wage level, which affect
employment at destination area and the relationship between labor market
performance and the probability of unemployment in Ho Chi Minh City. The paper
base on standard economic theories to present that the difference migration and wage
level at destination, while an effect unemployment differentials on migration.
The empirical evidence present based on the 2004 Vietnam Migration Survey, which
conducted by GSO and UNFP A. Results find that relate between migration and urban
unemployment in Ho Chi Minh City, recent migrants do well at finding formal
employment, and are much less likely to be unemployed.

i

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TABLE OF CONTAIN
CHAPTER 1: INTRODUCTION
1.1. Problem statement ............................................................................................ 10
1.2. The research objective of the thesis ................................................................. 11
1.3. Main hypothesis to be tested ............................................................................. 11
1.4. The scope and limitation of the thesis .............................................................. 11

1. 4.1 The scope of the thesis...................................................................................... 11
1.4.2 The limitation ofthe thesis .............................................................................. 12
1.5. Methodology ....................................................................................................... 12
1.6. Data source ......................................................................................................... 12
1.7. Research framework ........................................................................................ 12
CHAPTER 2: LITERATURE REVIEW
2.1. Migration and factors affect on migration ................................................ 14

2.1.1. Migration definition ...................................................................................... 14
2.1.2. Factors effect on migration ............................................................................ 16
2. 1.3. The effects on origin and destination areas.................................................. 17
2.2. Migration and urban unemployment in developing countries .................... 18

2.2.1. Migration in developing countries................................................................. 18
2.2.2. Urban unemployment in developing countries ............................................. 20
2.3. Migration theories overview ............................................................................ 23

2.3.1. Lee's migration theory ................................................................................... 23
2.3.2. The dual economy development model ......................................................... 24
2.3.3. The Harris- Todaro model............................................................................ 26

2.4. Economic impacts ............................................................................................. 28

2.4.1. Migration and economic development........................................................... 28
2.4.2. The relationship between the wage differential and employment ................ 29
2.5. Summing up ...................................................................................................... 31
CHAPTER 3: MIGRATION AND URBAN UNEMPLOYMENT IN VIET NAM
THE CASE OF HO CHI MINH CITY
3.1. An overview migration in Vietnam ................................................................ 33
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3.1.1. History and the trend of internal migration in Vietnam ............................... 33
3.1.1.1. Historical development of migration in Vietnam ......................................... 33
3.1.1.2. The trend of internal migration in Vietnam .................................................. 35

3.1.2. Internal migration in VietNam ..................................................................... 37
3.1.3. Employment and migration in VietNam ...................................................... 39
3.2. Migration in Ho Chi Minh City ...................................................................... 41

3.2.1. Overview migration in Ho Chi Minh City ..................................................... 41
3.2.2. Structure of migrants in Ho Chi Minh City .................................................. 42
3.2.3. A profile of migrants Ho Chi Minh City ....................................................... 44
3. 2. 3.1. Age Structure .... .... .... ... .... ... .... ... ...... ... .............................................. ... ....... .. 44
3.2.3.2. Sexual ............................................................................................................ 44
3.2.3.3. Place ofOrigin ............................................................................................. 45
3. 2. 3. 4. Education level ............................................................................................. 48
3.2.3.5. Working status and income ........................................................................... 49

3.3. Migration and urban unemployment, the case of Ho Chi Minh City ........ 51

3.3.1. Reasons for out- migration and motivation for migrating to HCM City .. 51
3.3.2. The migration and wage differential ............................................................ 53
3.3.3. Employment and unemployment in Ho Chi Minh City ................................ 55
CHAPTER4:METHODOLOGY
4.1. Introduction ....................................................................................................... 59

4.2. The econometric design ..................................................................................... 59
4.3. Description of the data ..................................................................................... 61
4.4. Variables description in model ......................................................................... 62

4.4.1. Dependent variables ........................................................................................ 62
4.4.2. Independent variables...................................................................................... 62
4. 4. 2.1. Individual characteristic variables................................................................ 62
4.4. 2. 2. Occupation variable..................................................................................... 63
4.4.2. 3. Migrant status variable ................................................................................ 63

CHAPTER 5: ECONOMETRIC ANALYSIS AND RESULTS
5.1. Descriptive analysis ........................................................................................... 66
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5.2. Results of regression model ............................................................................. 71

5.2.1. The wage model ............................................................................................... 71
5. 2.1.1. Estimate coefficients...................................................................................... 71
5.2.1.2. Comment on results ....................................................................................... 73

5.2.2. Unemployment model ...................................................................................... 74
5.2.2.1 Results ofregression ....................................................................................... 74
5.2.2.2 Comment on results ........................................................................................ 75

5.3. Summary ............................................................................................................ 77
CHAPTER 6: CONCLUSION AND POLICY IMPLICATIONS
6.1. Conclusion ..................................................................................................................... 78
6.2. Policy implications ........................................................................................................ 80

REFERENCES ......................................................................................................... 82

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LIST OF TABLES
Table 2.1: Rural-urban migration as a percentage of urban population growth, selected
developing countries ........................................................................................................ 21
Table 2.2: Rates of urban and rural unemployment as a percentage ofthe active
population in Africa, by country and year ....................................................................... 22
Table 2.3: Percentage of open urban unemployment in four African countries ............. 23
Table 3.1: Decrease and increase population by internal migration region, VietNam:
1994 - 1999 .. .. .. . .. .... ... .. .. .. .. .. ... .. .. .. ... .. .. ... ... .. .. ... .. .. .. .. .. .. .. .. .... .. ... .. .. .. .. .. .. ... .. ..... ... .. ... ... ... . 3 9
Table 3.2: The structure of the labor force ..................................................................... 40
Table 3.3: Population and migration increase rate by period ......................................... 43
Table 3.4: Percentage of distribution age structure of Ho Chi Minh City population and
that of migrants ................................................................................................................ 45
Table 3.5: Percentage distribution of migrant sex ratio by some age group .................. 45

Table 3.6: Percentage distribution of place of previous origin of migrants by area of
current residence.............................................................................................................. 46
Table 3.7: Percentage distribution ofresidence status of migrants in HCM City .......... 47
Table 3.8: Percentage of distribution of population rate in schooling by ages ............... 49
Table 3.9: The rate of population of dropout of school of children over the age 5 and
educationallevel .............................................................................................................. 49
Table 3.10: Percentage distribution of employment of migrants in 2004 by economic
sectors .............................................................................................................................. 51
Table 3.11: Monthly average income (dong) in 2004 ..................................................... 51
Table 3.12: Percent of migrants citing specified reason for move by area of current
residence and sex ............................................................................................................. 53
Table 3.13: Monthly income of rural to urban migrants by working skill, education .... 55
Table 3.14: Distribution of employment of migrants in 2004 by economic sectors ..... 56
Table 3.15: Unemployment rate of labor force of working ages in urban area ........... 57
Table 4.1: Description variables used in the model.. ...................................................... 64
Table 5.1: Characteristics ofboth migrants and non-migrants affect to their wage ....... 68
Table 5.2: Percentage distribution of occupation of employed population by migration
status ................................................................................................................................ 70
Table 5.3: Regression result ofunrestricted model (14 variables) ................................. 71
Table 5.4: Regression result ofunrestricted model (12 variables) ................................. 72
Table 5.5: Probability of Unemployment: Logit regression for Migrants and Nonmigrants ........................................................................................................................... 75

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CHAPTER 1
INTRODUCTION
1.1. PROBLEM STATEMENT

In the past 20 years, Vietnam has been remarkably successful in ensuring high levels
of economic growth and in reducing poverty. This goes hand in hand with important
shifts in population distribution and mobility.
The economic reforms carried out in 1986-affected migration in three main ways. In
agriculture and the introduction of the household contract system have released
farmers from the land. In cities, the household registration system continues, but no
longer limits the acquisition of essential goods and access to employment. In the
emerging industrial sector, Vietnam's incorporation into the global economy, it has
resulted in flows of foreign direct investment attracting migrant workers where such
industries, services.
The migration from rural to urban areas has been an important part of the urbanization
process and created structural changes population among regions, especially make
labor market adjustment from agriculture to manufacturing and services sector in
modernization and industrialization process in Vietnam.
Todaro and Harris (1970), the migration of rural to urban areas is an important part of
the problem urban

unemployment

and

underemployment

in almost every

contemporary big city in developing countries. Rural to urban migration mainly
caused the labor force in rural to become scarcely. Simultaneously created urban
unemployment for unskilled and skill labor in formal and informal sector.
Ho Chi Minh City is the largest economics central in Viet Nam. The city and its

surroundings have lured more investors than any other area in Viet Nam. By at the
end 2006, Ho Chi Minh City had toped about attracting FDI account to 26,9% of
project, 24,1% total registered capital (reported by MPI, 10-2006)
This thesis will to what find is relational migration and under what circumstance? In
addition, how to it is relate to urban unemployment in Ho Chi Minh City? Should
local government intervene and create conditions to attract high skill employment as
migrants. Moreover, what should be their policy to reduce unemployment situation in
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•
urban area. The thesis tries to find the determinants of migration effects to
unemployment. To do so, we use instrumental variables and cross - section data
techniques which is used to this thesis

1.2. THE RESEARCH OBJECTIVE OF THE THESIS
The main objective of this thesis will be analyzing the feature of migrants that relate
to urban employment, the case of Ho Chi Minh City. The finding mainly factors an
economic behavioral of rural - urban migration and the determinants of urban
unemployment. Additionally, fulfill these alternative policies design to alleviate urban
unemployment. The thesis focuses on addressing the following issues:
To analyze the personal characteristics effect on finding job in Ho Chi Minh City.
To explore the link between migration and wage level which affect employment
level at destination area
What is the labor market performance of migrants in term of their wages and the
probability of unemployment?

1.3. MAIN HYPOTHESIS TO BE TESTED

In the context of significant migration that take opportunities and challenges for the
country's development and urban area related to non - migrants and migrant's
employment and unemployment, this study expect to find out the relationship
between the migration and unemployment in urban sector.
1. Individuals seek to maximize their incomes moving to places where the wages
are higher. Therefore, the main engines of the decision are wages differentials,
which result from geographical differences in demand and supply in urban labor
markets. How does the relationship the migration and wages at destination?
2. How the link between migration and unemployment status at urban sector, in
which based on human capital model, the key issue is whether being a migrant
has a distinctive effect on the probability of being unemployed.

1.4. THE SCOPE AND LIMITATION OF THE THESIS
1.4.1. The scope of the thesis
The place to choose in research is Ho Chi Minh City because it is the biggest city in
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•
Viet Nam with high proportion of the population residing in urban area. Migration
flow come from all part of country. Ho Chi Minh City where economic opportunities
are often more favorable in the cities than in the other areas
The main source data took from the 2004 VietNam Migration Survey. The survey
carried out in interviews 4,998 migrants and 5,008 non-migrants of Vietnam. In Ho
Chi Minh City, the survey is carried out at six districts, which included Tan Binh,
Binh Tan, Binh Chanh, Go Vap, Thu Due and district 12; the survey includes in the
following areas:
Respondents' background

Social - economic, demographic, and facilitating factors related migration.
Activities and current living condition
The objective to do research is the determinants of internal migration into Ho Chi
Minh City and probability of unemployed at destination. In the research, I am trying
to find out how do the relationship characteristics of individual, wage level and
unemployment at Ho Chi Minh City. However, this thesis did not mentioned to
migration process so we cannot show the whole picture of migrant and non migrant's background related wage and unemployment.
1.4.2. The limitation of the thesis

The thesis does not aim to provide an overall picture the social - economic and health
of migrants in Ho Chi Minh City. It attempt to evaluate and find out relationship
between migration and wage, probability of unemployment in the difference between
migrants and non- migrants in Ho Chi Minh City.
The 2004 VietNam Migration Survey designed as a micro-level study of migration in
selected areas that are major destinations for internal migrants in Viet Nam. These
areas include rural areas, industrial zones and large cities. The main objective of the
survey is to expand the knowledge base on migration outcomes within VietNam. The
focus of the survey is on decision making related to migration and outcomes of
migration. The results of the Vietnam Migration Survey 2004, data of Ho Chi Minh
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City, will be analysis and evaluate.
1.5. METHODOLOGY

The thesis method used

IS

mainly quantitative combining both descriptive and

regression analysis.
First, the descriptive statistic method use to describe the relevant database. Next, an
econometric model estimate to examine the relationship between dependent and
independent variables. The relationship tested by a set of primary data, which
collected by Vietnam GSO and UNPFA, 2004.
1.6. DATA SOURCE

The study uses primary and secondary data source from Vietnam Migration Survey
2004 by General Statistic Office and UNFPA conducted 2004.
The 2004 Viet N am migration survey was collected information on various aspects of
respondents' background, migration history, details of last move, activities and current
living condition, health and STis, AIDS and family planning in migrants and non migrants.
Other information sources from report, articles and newspaper
1. 7. RESEARCH STRUCTURE
Chapter 1: Introduction
Chapter 2: Literatures review. This part will discuss of the literature review

analyze migration its relation with urban unemployment in developing countries
Chapter 3: Migration and urban unemployment in VietNam, the case of Ho Chi

Minh City
Chapter 4: Methodology
Chapter 5: Econometric analysis and Results
Chapter 6: Conclusion and Policy implications

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CHAPTER2
LITERATURE REVIEW
2.1. MIGRATION AND FACTORS AFFECT ON MIGRATION.
2.1.1. Migration definition

Migration is socio-economic phenomenon that could find in any country. Generally,
migrations include all types of residential change from one domicile to another
(Goldscheider, 1971). Migration, which occurs because of changes in the economical,
cultural, and political structures of social transformation, causes important
alternations in social structure. Therefore, migration is defined as a demographic
process mainly as changes in residential areas between the geographic and/or
administrative regions. Migration, in this perspective, is an act of change itself for
both the migrant and the societies, communities between which the migrant has
moved. Both demographic and historical dimensions of migration brought into
consideration, in particular, their varying effects on different institutions, such as
marriage and family. Migration decision has also focused on the individual
characteristics of persons that do or do not predispose them to migrate such as
person's age, sex, education (Sjaastad, 1962).
Migration to urban and related problem is common issues in developing countries
such as employment, environment and housing shortage. Main goal is to minimize the
negative effects of this process and complete this process with least problems.
Because migration and urbanization, which is one of the first steps of modernization,
will certainly occur together with some mistakes and troubles. Therefore, due to
migration towards cities several different settlements occurred and still are occurring
in the centers and surroundings of cities.
Lee ( 1969) pointed out that the migration process is selective because differentials
such as age, gender, and social class affect how persons respond to push and pull

factors, and these conditions shape their ability to overcome intervening obstacles.
According to Lee, the "push factor" could be more important than the "pull factor",
which the difficulties in rural areas, such as poverty, unemployment, land shortages

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are driving forces that urge the farmers to leave their native areas the homeland to
find a new place to settle and to work. The "pull factor", which refer to job or income
opportunities outside the farmers' homeland that are so attractive that they cannot stay
at home. By these means, the job and income opportunities in urban areas are pulling
factors that pull the people to the urban areas to settle and finding jobs for themselves.
Larson and Mundlak (1997) suggest that rural to urban migration is beneficial for the
remaining agricultural workers are increased and so is their income. The same amount
of output produced by fewer labors raises the income level of the households. This
reduces the rural urban income differential and acts as a disincentive to rural to urban
migration for raising the family income. The rural sector can also benefit from benefit
from remittance send by the migrants, Williamson (1988) shows that remittances in
Africa and Asia equal 10 to 13 percent of the urban incomes of rural migrants.
Therefore, the centrality of the phenomenon is to recognize that economics issues are
mainly causes to affect rural and urban migration process. This process will in tum
itself tend to alter the pattern of sectoral and geographic economic activity, income
distribution and even population growth.
For the case of Vietnam, the movement of people who leave the countryside for
gaining better social - economic opportunities in the cities (including towns at the
country level) will considered as rural - urban migration. With frequent fluctuation
and prolonged depressions in the prices of agriculture communities associated with
the greater global integration, it is more difficult for rural people to make a living on

small farms. Not surprisingly, migrating (especially to the cities) is the aspiration in
life for the overwhelming majority of non - farm people and especially youth who
have many opportunities to find job in urban areas. Despite often living in crowded
conditions and working overtime, migrants can hope to earn much higher incomes
than on their farm or in rural employment.
2.1.2. Factors effect on migration

The factors influencing the decision to migrate are varied and complex. Because
migration is a selective process-affecting individual with certain economic, social,
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educational and demographic characteristic, the relative influence of economic and
non-economic factor may vary not only between regions and areas but also within
defined geographic areas and population. Migration were effected by difference in
economic opportunities and living conditions between places (rural and urban
sectors), people's awareness of those differences and desires to improve their live by
moving and their ability to act upon those desires. The main factors influencing
desires to migrate include difference in employment opportunities, wages rate and
living conditions. Moreover, nature of migration decisions and the relevance of both
origin and destination conditions to these decisions. Factors are in influencing outmigration from rural areas in the context of household and community-level
contextual factors. That are affected income-earning opportunities of household
members at the level of the household farm or business (e.g., the amount and quality
of land available); or through their effects on economic opportunities in the
community.

Internal factors (Market,
price, trade/capital flows)

I
I
I
I
I
Local community,
Conditions in area of
original

\
\

Urban policies (Economics,
environment, demographic,
socio - economic,
infrastructure)

\
\
\

\
\

\

Decision to migrate

Local community

Conditions in possible
areas of destitution

Individual/household
characteristics (Age, education,
marital status, previous
migration, work experience of
member, family
size/composition, land/assets,
migration network)

Adapted to Richard E. Bilsborrow, Migration, population change, and the rural
environment, p78, ECSP report, Issue 8, 2002
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2.1.3. The effects on origin and destination areas

The production structure of an economy also affects the migration decisions of
individual. For instance, in Vietnam, the change in the agricultural structure has had
important consequences for developing the rural sector. That is cause for migration to
urban areas. The flow of rural migrants to urban areas, the effect on destination area is
less clear, if urban industries cannot absorb all migrants, there will be higher urban
unemployment. However, some companies will prefer to employ migrant labor. Rural
migrants have fewer expectations of job opportunities and generally receive lower
wages. Moreover, there is also some evidence that the destination areas will benefit
from rural to urban migration, when rural migrants do unpleasant jobs, contribute to
economic growth and as consumers in the urban economy.

2.2. MIGRATION AND URBAN UNEMPLOYMENT IN DEVELOPING
COUNTRIES
2.2.1. Migration in developing countries

In many developing countries, rural poverty manifested in low agricultural incomes,
low productivity and underemployment is pushing many migrants out of rural sector
towards sectors with greater employment opportunities. Some recent studies in
developing countries have observed increasing unemployment in rural sector and a
further widening of the gap between rural and urban income (see, as example, Todaro,
1969, 1997). The pressure of population in terms of higher people/land ratios have
been hypothesized as an important cause of increasing poverty and of rural out migration, with given technology, there is only a certain proportion of the labor force,
which can be absorbed by agriculture, and indeed as technology advances, demand
for rural labor may diminish, thereby creating further unemployment. As the
population grows, increasing numbers of people must move to the urban centers for
employment opportunities, unless difficult to imagine radical improvements can be
made in agricultural intensity and rural systems. In fact, population pressure is not the
only nor even the principal cause of the increasing unemployment and poverty of the
rural population; at least as important are the low rate of investment in agriculture,
fragmentation of land ownership, inequalities in the distribution of land and other
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productive assets. One o the mam reasons for this is the fact that much farm
technology is imported from labor scare countries and favors the use of capital
relative to labor (Lucas, 1997).
Due to the over-population problem in most developing countries, especially in Asia,
Africa, and the continuing high levels of demographic fertility, the pool of landless in
addition, near - landless increases from generation to generation. Progressive

fragmentation of land has pushed many of the landless and near- landless peasants to
move to cities in search of non - agricultural jobs.
While these factors have led to rural - urban migration among the very poor,
especially those of the rural middle and upper classes, with low education level and an
awareness of the economic and social opportunities available in urban centers, some
migrants to further their education while others migrate as they become dissatisfied
with the prospects of rural life.
The concentrated growth of industrial infrastructure in the cities m developing
countries after independence has encouraged migration streams from rural regions by
providing job opportunities for those migrants. Until recently, governments have also
favored a policy of concentrating public and social services investments in urban
areas, particularly major urban areas. Similar investments in the rural areas neglected.
In most of the developing world, migrants from rural to urban regions target primate
cities. This phenomenon is due to the concentration of services, industrial zone, and
other social economic and cultural services in prime cities and large metropolitan
regions. The development of transport system has found to reduce the role of distance
on inhibiting migration in developing countries (Greenwood et al., 1981 ).
Transportation and communication system not only reduce the cost of migration but
also reduce cultural gap between the origin and destination sectors, making migration
eas1er.
Migration exacerbates these rural - urban structural imbalances in two direct ways.
First, on the supply side, internal migration disproportionately increases the growth
rate of urban job seekers relative to urban population growth, because of the high
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proportion of well - educated young people in the migrants group. Their presence
tends to swell the urban labor supply while depleting the rural countryside of valuable

human capital. Second, on the demand side, urban job creation is generally more
difficult to accomplish than rural job creation because of the need for substantial
complementary resource inputs for in the industrial sector. Moreover, the pressures of
rising urban wages and compulsory employee fringe benefits in combination with the
unavailability of appropriate, more labor-intensive production technologies means
that a rising share of modem-sector output growth is accounted for by increases in
labor productivity. Together this rapid supply increase and lagging demand (what
many now refer to as "jobless growth") tend to convert a short-run problem of
resource imbalances into a long-run situation of chronic and rising urban surplus
labor.
2.2.2. Urban unemployment in developing countries

The economic explanation of human mobility treat the decision to migrate as an
investment decision involving an individual's expected costs and returns- monetary
l

and non- monetary overtime (Siaastad, 1962). This approach assumes that migrants
have access to precise information about the economic conditions at both ends of the
migration process. An alternative model (Todaro, 1976) suggests that the decision to
migrate built on a perception of an expected stream of income, which depends on
urban wages, and the probability of obtaining employment. However, Todaro assumes
also that urban in - migrants are able to upgrade and move from the informal or
traditional sector to the modem sector.
Other studies have shown that in the cities of developing countries where an informal
sector exists the rate of rural to urban migration was often high. Poor peasants were
often attracted to the unskilled jobs and cash income this sector provided, as poor
people from the countryside often had low levels of education and lacked vocational
skills. The informal sector did not hinder a poor person's chance for employment;
rather it attracted unskilled laborers who were preferred for low wage employment.
Some studies have shown that if land distribution created wider disparities, the

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possibility of improving the living standards of poor people decreased and because of
this, the rate of rural-urban migration increased.
In developing countries, the extent of government concern and even alarm at the
trends in urban population growth in the world. Almost all countries dissatisfied with
the size and growth of their urban population believed that internal rural-urban
migration was the dominant factor contributing to city growth.

Table 2.1: Rural-urban migration as a percentage of urban population growth,
selected developing countries

Country

Item

Annual urban
growth

Share of growth
due to migration

1

Argentina

2.0

35

2

Brazil

4.5

36

3

Colombia

4.9

43

4

India

3.8

45

5

Indonesia

4.7

49

6

Nigeria

7.0

64

7

Philippines

4.8

42

8

Sri Lanka

4.3

61

9

Tanzania

7.5

64

10

Thailand

5.3

45

Source: K. Newland (1980), City Limits: Emerging Constraints on Urban Growth, World
watches PaperNo. 38. Washington, DC. Todaro. M.P, 1997 No 104
The problems of rapid urban growth and accelerated rural- urban migration
undoubtedly will be one of the most important developments in developing countries.
However, the problem of urban unemployment and underemployment in almost every
contemporary developing country, the one of the major consequences of the rapid
urbanization process has been the burgeoning supply of job seekers in both the
modem (formal) and traditional (informal) sectors of the urban economy. For

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instance, in most African countries, the supply of workers far exceeds the demand, the

result being extremely high rates of unemployment and underemployment in urban
areas. These statistics are from the 1960s (more recent detailed data for these
countries are nearly nonexistent).

Table 2.2: Rates of urban and rural unemployment as a percentage of the active
population in Africa, by country and year
Item

Country

Year

Area

Unemployment
Urban

Rural

1

Algeria

1966

Urban areas

26.6

n.a

2

Benin

1968

Urban areas

13.0a

n.a

3

Burundi

1963

Capital city

18.7a

n.a

4

Cameroon

1962

Largest city

13.0a

n.a

1964

Capital city

17.0a

n.a

5

Cote d'Ivoire

1963

Capital city

15.0a

n.a

6

Ghana

1960
1970

Large town
Two large cities

12.0
9.0

n.a
n.a

7

Kenya

1968-69

Capital city

lO.Oa

n.a

1968-69

Second largest city

14.0a

n.a

8

Morocco

1960

Urban areas

20.5

5.4

9

Nigeria

1963

Urban areas

12.6

n.a

10

Sierra Leone

1967

Capital city

15.0

n.a

11

Tanzania

1965

Urban areas

7.0

3.9

1971

Seven towns

5.0a

n.a

1967

Capital city

12.9

n.a

12

Zaire

Note: na = Data not available. aMen only.
Source: Paul Bairoch (1973), Urban Unemployment in Developing Countries. Geneva:
International Labour Organization, 1973. Page 49. Josef Gugler (1976), Internal Migration:
The New World and the Third World. Eds. A. Richmond and D. Kubat. Beverly Hills, CA:
Sage, 1976. Page 185. Todaro. M.P, 1997 No 104

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.
Unemployment rates considerably below current levels (for some 1980s data),
•

African cities had very high rates of open urban unemployment.
Table 2.3: Percentage of open urban unemployment in four African countries
Co untry

Item

.
.

Year

Average unemployed

1

Botswana

1985

31

2

Kenya

1986

16

3

Liberia

1984

13

4

Tanzania

1984

22

Source: International Labour Organization ( 1989), World Labour Report, 1989. Geneva:
International Labour Org anization. Tables 1.7 and 1.12. Todaro. M.P, 1997 No 104

The substantial numbe rs of the urban labor force who were underemployed in parttime, informal-sector service activities had been included, the overall figures for
urban surplus labor (both openly unemployed and underemployed) would have
exceeded 30 percent in most countries (Todaro, 1997).
2.3. MIGRATION T HEORIES OVERVIEW

For some decades, va rious approaches have been trying to analyze and provide
fundamental understanding for the phenomenon of migration. There are multitudes of
theoretical as well as empirical studies, which are concerned with the determinants

.
.

both of international an d of internal migration.
2.3.1. Lee's migratio n theory

Lee (1969) classified all factors associate with migration into four major groups:

Factors associated wit h the area of origin, Factors associated with the area of
destination, Intervening obstacles and personal factors. According to him, in every
area there are various factors. Some of them attract people to move to, some other
factors tend to repel p eople, and there are neutral factors. Between the origin and
destination, areas are many intervening obstacles. However, regional factors affect

•

different people in different ways. For example, the cost of transporting household
goods may be negligibl e to some people but prohibitive to others .

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Alternatively, Lee also already divided the forces exerting an influence on migrant
perception into "push" and "pull" factors. The former are negative factor tending to
force migrants to leave origin areas, while the latter are positive factor attracting
migrants to destination areas in the expectation of improving their lot. Lee
hypothesized that factors associated with origin area conditions would be more
important than those associated with destination sector would. These forces associated
with the area of origin and of destination are governed by personal factor "which
affect individual thresholds and facilitate or retard migration" (Lee, 1969). Lee's
approach reflected in a broad range of studies, particularly sociological studies
dealing with migrant selectivity. It is actually not a theory but a conceptual
framework for classifying factors in migration decisions.
The final element in Lee's model is the notion of "inventing obstacles" interposed
between origin and destination. These constitute "friction" in the migration process
(transport costs, migration controls) and may reduce or retard migration. Lee's

approach reflected in a broad range of studies, particularly sociological studies
dealing with migrant selectivity. It is actually not a theory but rather a conceptual
framework for classifying factors in migration decisions
2.3.2. The dual economy development model

Theoretically, migration is defined as simply a process of personal movement from
one area to another. However, economist consider rural to urban migration as a
process of labor movement from less - developed to more advanced areas. The first
well - known economic model of development to include as an integral element the
process of rural - the agricultural sector where the labor force is suffering from
unemployment and underemployment transfer modernization areas where many
employment opportunities are being generated and also suffering from a labor
shortage Lewis ( 1954). This model considers migration as an equilibrating
mechanism, which through transfer of labor from the labor surplus to the labor deficit
sector, eventually brings about wage equality in the two sectors. The model based on
the concept of a dual economy, comprising subsistence, agriculture sector
characterized by unemployment and a modem industrial sector characterized by full
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employment to equilibrium.
In the subsistence sector the marginal productivity of labor is zero or very low and
workers are paid wages equal to their cost of subsistence, so wage rates exceed
marginal products. Because of high productivity or labor union pressure, wages in the
modern urban sector are much higher. With such differences in wage rates, migration
occurs from the subsistence to the industrial sector. This increases industrial
production as well as the capitalist's profit. Since this profit assumed to reinvest in the
industrial sector, it further increases the demand for labor from the subsistence sector.

The process continues as long as surplus labor exists in the rural sector is greater than
or equal to the rate of labor out - migration, but it must end eventually if the rate of
growth of demand for labor in the area exceeds rural population growth.
Despite the appeal of the dual economy model, most observers have found it
unsatisfactory because of a number of shortcomings. First, migration did not included
solely by low wages and underemployment in rural areas. Second, the assumption of
near - zero marginal productivity and surplus labor in agriculture has been widely
criticized on empirical grounds. Third, the model assumes a high rate of expansion of
employment opportunities through continuous investment of the rural surplus in the
urban sector. In fact, the rate of growth of employment in the modern industrial sector
has generally not been sufficient in developing countries to absorb the increasing
labor supply resulting from both natural population increases in the urban sector and
net rural -urban migration. Consequently, the net effect of rural - urban migration
has been to shift underemployment from the rural to the urban sector.
The dual economy explains convincingly the causes of migration because of wage
rate differences, many other theorists have brought out it unsatisfactory because of a
number of shortcomings (Todaro, 1976). First, although the wage rate differences are
an important reason for migrants to move from a rural to an urban sector, the
movement of people from rural to urban sector should not to be seen as simply a case
of wage differences. Second, many people believe that the assumption of zero
marginal productivity and labor surplus in rural sector are not very realistic. Third, the
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assumption that the rate of job generation in urban sector is high enough to absorb the
labor from rural sector is not true in many cases. Fourth, there is the possibility that
urban investors might invest their industrial profits in new technology and labor saving machinery, thereby killing the demand for further rural labor transfer. In
general, industrialization in urban sector creates a high demand for labor, but

nowadays under the strong threat of competition, many firms have not employed
labor intensity technology, but capital intensity instead, therefore the demand for
labor in urban sector is not always high enough to absorb labor from rural sector.
2.3.3. The Harris- Todaro model
Todaro ( 1969), Harris and Todaro (1970) set up a seminal framework of migration
between rural and urban areas. They hypothesize that individuals migrate to urban
sectors with the aim of obtaining employment in the formal sectors and that informal
sector employment is a transitional phase during which migrants are searching for
formal sector job. In their decision to migrate, potential migrants balance the
probability of unemployment against the real income differentials between urban
formal sector and the rural area. The decision to migrate depends on expected rather
than actual urban-rural real wage differentials, where the expected differential is
determined by the interaction of two variables, the actual urban-rural wage
differential and the probability of obtaining employment in the urban sector (Todaro,
1969).
Migration rates in excess of job-opportunity growth rates are not only possible but
also rational and even likely in the face of wide urban-rural expected-income
differentials. High rates of urban unemployment are, therefore, inevitable outcomes of
the serious imbalance of economic opportunities between urban and rural areas. In the
Todaro approach, migration rates in excess of the growth of urban job opportunities
are not only possible but also rational and probable in the face of expected large
positive urban - rural income differentials. High rural - urban migration can continue
even when high urban unemployment rates exist and known to the potential migrants.
The approach therefore offered a possible explanation of a common paradox that
migration keeps on happing even with rising urban unemployment. In early dualistic

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