The economic impact of internal migration :

Abstract

Based on the theoretical models, several empirical models have been developed to estimate the impacts of migration on sending and receiving areas. The econometric estimates obtained by this study using single equation and simultaneous equation models suggest that migration had a negative impact on the output of the agricultural sector and a positive effect on the production of the service and modern sectors. The findings further indicate that rural-urban migration increased the gap between rural and urban income rather than decreasing it. Furthermore, the process of migration not only has a negative impact on economic growth of sending areas but also puts pressure on government authorities to provide ever more expensive urban amenities to maintain the current living condition of urban residents.

The purpose of this study is to assess the impact of internal migration on the economics of both sending and receiving areas of a developing country such as Iran where the internal migration was insignificant before World War II. However, it was accelerated when the government increased its role in economic activities through various National Development Plans. For this purpose, two theoretical models have been developed. Both models predicted that due to the nature of the economy of LDCs it is highly possible that migration has a negative impact in terms of output and employment on sending areas and a positive impact on receiving areas.

The results of this study do suggest that in order to reduce the negative impact of internal migration the policymakers of LDCs must implement a comprehensive program to divert the flow of migration from overpopulated urban areas. They must also design a comprehensive rural development program to bring economic opportunity to rural residents.

Industrial development has always been accompanied by considerable migration. Until recently, many economists believed that internal migration, especially from depressed rural areas to urban areas, led to a more efficient utilitization of human resources as well as other factors of production. However, today many development economists hypothesize that the rapid pace of massive rural-urban migration in less developed countries (LDCs) may lead to lower national income and higher income inequality.