Transcript Labor Migration: Micheal Todaro

Labor Migration: Micheal Todaro
A look at Rural - Urban Migration in
terms of theory and policy
Micheal Todaro
The Urban Informal Sector
Unregulated, unorganized
Self-employed:street vending, knife
sharpening, prostitution, drug peddling
Noticed in the 1970’s because of massive
additions to the urban labor force failed to
show in the modern sector unemployment
statistics.
Characteristics of Informal
Small scale production
Service activities that are family owned
Labor-intensive and simple technology
Tend to work to survive rather than for
profit
Informal sector is a holding ground for
people awaiting entry into formal sector
Promoting the informal sector
Informal sector generates surplus even
under the currently hostile policy
environment
Result of its low capital intensity, only a
only a fraction of the capital needed in the
formal sector is required to employ a
worker in the informal sector
Continuing...
By providing access to training and
apprenticeships at substantially lower
costs than the formal sector the informal
sector can create human capital
Informal sector generates demand for the
unskilled which are turned away from the
formal sector
Once more...
Informal sector is likely to adopt
appropriate technologies and make use of
local resources, allowing more efficient
allocation of resources
Promotion of the informal sector would
ensure increased benefits or development
to the poor
Disadvantages of the Informal
Sector
Labor absorption in the informal sector
Pollution
Lack of Capital is a major constraint on
activities in the informal sector
Migration into Urban Areas -Supply Side
Increases growth rate of urban job
seekers relative to urban population
growth
The presence of well-educated young
people swell the growth of urban labor
supply while depleting the rural
countryside of valuable human capital
Migration into Urban Areas -Demand side
Rising urban wages and compulsory
employee fringe benefits in combination
with the unavailability of more labor
intensive production technologies means a
rising share of modern sector output
growth accounted for by increase in labor
productivity-supply increases-and demand
lags creating labor demand shortages
Migrant Characteristics
Demographic - young men and women
between ages of 15 and 24
Educational - recent studies have found
that the more educated the more likely to
migrate
Economic - poor, landless, and unskilled to
educated, skilled