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Search, migration, and urban land use: the case of transportation policies

Search, migration, and urban land use: the case of transportation policies
Search, migration, and urban land use: the case of transportation policies
We develop a search-matching model with rural–urban migration and an explicit land market. Wages, job creation, urban housing prices are endogenous and we characterize the steady-state equilibrium. We then consider three different policies: a transportation policy that improves the public transport system in the city, an entry-cost policy that encourages investment in the city and a restricting-migration policy that imposes some costs on migrants. We show that all these policies can increase urban employment but the transportation policy has much more drastic effects. This is because a decrease in commuting costs has both a direct positive effect on land rents, which discourages migrants to move to the city, and a direct negative effect on urban wages, which reduces job creation and thus migration. When these two effects are combined with search frictions, the interactions between the land and the labor markets have amplifying positive effects on urban employment. Thus, improving the transport infrastructure in cities can increase urban employment despite the induced migration from rural areas.
0304-3878
174-187
Zenou, Yves
38bf0c72-462b-4c08-8fd1-ce365b0296dc
Zenou, Yves
38bf0c72-462b-4c08-8fd1-ce365b0296dc

Zenou, Yves (2011) Search, migration, and urban land use: the case of transportation policies. Journal of Development Economics, 96 (2), 174-187. (doi:10.1016/j.jdeveco.2010.11.001).

Record type: Article

Abstract

We develop a search-matching model with rural–urban migration and an explicit land market. Wages, job creation, urban housing prices are endogenous and we characterize the steady-state equilibrium. We then consider three different policies: a transportation policy that improves the public transport system in the city, an entry-cost policy that encourages investment in the city and a restricting-migration policy that imposes some costs on migrants. We show that all these policies can increase urban employment but the transportation policy has much more drastic effects. This is because a decrease in commuting costs has both a direct positive effect on land rents, which discourages migrants to move to the city, and a direct negative effect on urban wages, which reduces job creation and thus migration. When these two effects are combined with search frictions, the interactions between the land and the labor markets have amplifying positive effects on urban employment. Thus, improving the transport infrastructure in cities can increase urban employment despite the induced migration from rural areas.

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More information

Published date: November 2011
Organisations: Social Sciences

Identifiers

Local EPrints ID: 339645
URI: http://eprints.soton.ac.uk/id/eprint/339645
ISSN: 0304-3878
PURE UUID: 08a2d4e6-5164-42b0-a2c8-6dacb8def61f
ORCID for Yves Zenou: ORCID iD orcid.org/0000-0001-6516-0812

Catalogue record

Date deposited: 28 May 2012 15:59
Last modified: 15 Mar 2024 03:43

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