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PubMed · 12267743

Labor migration and risk aversion in less developed countries.

E Katz·O Stark
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Abstract

"In this paper we question the pioneering work of Todaro, which states that rural-to-urban labor migration in less developed countries (LDCs) is an individual response to a higher urban expected income. We demonstrate that rural-to-urban labor migration is perfectly rational even if urban expected income is lower than rural income. We achieve this under a set of fairly stringent conditions: an individual decision-making entity, a one-period planning horizon, and global risk aversion. We obtain the result that a small chance of reaping a high reward is sufficient to trigger rural-to-urban labor migration."

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BehaviorDecision MakingDemographyDeveloping CountriesEconomicsEmigration and ImmigrationEmploymentEvaluation Studies as TopicHealth WorkforceIncomeMotivationPopulationPopulation DynamicsProbabilityPsychologyResearchSocioeconomic FactorsStatistics as TopicCritiqueDemographic FactorsEconomic FactorsHuman ResourcesLabor ForceMigrationPsychological FactorsResearch MethodologyRural-urban MigrationStatistical StudiesStudiesJournal Article

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E Katz, O Stark. 1986. Labor migration and risk aversion in less developed countries.. https://doi.org/10.1086/298097

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