Intersectoral Size Differences and Migration: Kuznets Revisited

39 Pages Posted: 29 Apr 2005

See all articles by Nejat Anbarci

Nejat Anbarci

Deakin University - Department of Economics

Mehmet Ali Ulubasoglu

Deakin University - School of Accounting, Economics and Finance

Date Written: April 2005

Abstract

The empirical evidence on the Kuznets hypothesis ranges from positive or negative support to insignificant relationships. This hypothesis is typically tried in most studies in domains different than the one conceived by Kuznets, which pertains to the industrialization-led urbanization (i.e., significant rural-urban migration) phase of societies. In this paper, we offer a specific channel on Kuznets' hypothesis in his suggested domain. First, we establish theoretically that intersectoral urban-rural size differences result in an intersectoral income inequality, increasing the national inequality. This, in turn, prompts an intersectoral migration, which works as an equilibriating mechanism in the economy, decreasing the inequality in due course. We then successfully test the predictions of the model. The theoretical predictions yield a recursive triangular system, in which we test, i) how the sectoral size differences influence the agricultural income, ii) how a change in agricultural income acts on migration, and iii) what happens to the income distribution as a result of migration. We find a very strong support for the theoretical predictions and the Kuznets hypothesis in its own domain.

Keywords: Kuznets Hypothesis, Endogenous Migration, Simultaneous Equations

JEL Classification: C51, O14, O15

Suggested Citation

Anbarci, Nejat and Ulubasoglu, Mehmet Ali, Intersectoral Size Differences and Migration: Kuznets Revisited (April 2005). Available at SSRN: https://ssrn.com/abstract=712522 or http://dx.doi.org/10.2139/ssrn.712522

Nejat Anbarci (Contact Author)

Deakin University - Department of Economics ( email )

70 Elgar road
Burwood, Victoria 3215
Australia

HOME PAGE: http://www.deakin.edu.au/~nejata/

Mehmet Ali Ulubasoglu

Deakin University - School of Accounting, Economics and Finance ( email )

Burwood, Victoria 3215
Australia
+61 3 9244 6592 (Phone)

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