Migration from rural to urban areas has been observable throughout the history of mankind. This process accompanied industrial development of today’s prosperous nations and is now happening at a much faster rate in the developing ones. The problems posed by this process in the least developed nations, however, include the too fast migration rate that exceeds the absorption capacities of urban centers and leads to unemployment. To address these concerns in policy-making, scholars have advanced a number of theories to explain the phenomenon of migration. One of them is the Todaro model. This theory advances an interesting explanation of the nature of rural-urban migration and entails interesting policy implications, to be evaluated in this paper.
The idea behind the Todaro model is simple but workable: it “postulates that migration proceeds in response to urban-rural differences in expected income rather than actual earnings” (Todaro, Smith, 2006, p. 339). A rural worker contemplating a move to the city first projects expected earnings over a certain time horizon, then juxtaposes the returns from the move with the costs of the transfer to a different environment. If the difference from rural incomes seems impressive, the worker will make the plunge and change the residence.
The Todaro model also brings the looming spectre of unemployment into the picture, introducing it as probability of finding suitable higher-paid employment. If the worker can expect, for instance, to earn twice as much in the city as in the village, this would lead to automatic transfer of the majority of population from villages to cities. However, this does not happen because this would automatically lead to the staggering rise in unemployment. The prospect of unemployment is what really keeping people on the land, especially those who are unskilled and have worse chances. The potential rural migrant should normally reckon with the probability of finding a well-paid urban job over a longer time horizon as his or her skills increase, and the social network of contacts grows. Thus, a person expecting future increase in income over the rural incomes can be expected to put up even with a temporary drop in income “as long as the present value of net stream of expected urban income over the migrant’s planning horizon” (Todaro, Smith, 2006, p. 339).
The defining feature of the Todaro model is its emphasis on economic factors and replacement of real income differentials with expected income. However, the authors are also willing to factor in more elusive psychological and individual factors, such as education level permitting to find a better job, personal risk tolerance, and presence of local communities. They also make unemployment rate an important factor relevant to the probability of finding a good job.
The policy implications of the model are multiple. Since migration occurs in response to the “imbalances between economic opportunities between rural and urban centers”, a policy that will minimise these imbalances and reduce this difference will contribute to more proportionate development of different areas (Todaro, Smith, 2006, p. 344). Besides, the model disputes the Keynesian recipe for overcoming city unemployment, connected with increased job creation in urban centers. Todaro and Smith demonstrate that this will only increase migration and can even lead to further surges in unemployment numbers as more and more people will be attracted to the city. The real solution, they claim, is the job creation in rural regions.
The Todaro model also warns against unlimited educational expansion that results from increasing unemployment. Since employers can use educational level of applicants to sift through the sizeable pool, more and more people will be forced to upgrade their education in order to compete in the job market. This creates “increasing pressure to proceed up the educational ladder” (Todaro, Smith, 2006, p. 345). As a result, the government is forced to invest in education that will not necessarily result in employment, and funds are used with little effect.
The ultimate conclusion of the Todaro model is the emphasis on the need to craft effective strategies for rural development. Implementation of such strategies will help developing nations equalize incomes across the nation and correct disproportions in development. These policies can be also expected to benefit urban centers, removing the surplus labor that leads to persisting unemployment. The workforce in urban centers will thus be put to the best use. By boosting income expectations of those staying in the villages, the government will be able to retain them where they live. A balanced, well-thought out policy of rural development can prove a mighty tool in spearheading balanced, sustainable development.
Todaro, M.P. & Smith, S.C. (2006). Economic Development (9th ed.). Pearson, Addison – Wesley.
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