Chapter 7 Flashcards
(17 cards)
the notion that most governments in developing countries favor the urban sector in their development policies, thereby creating a widening gap between the urban and rural economies
urban bias
movement of people from rural villages, towns, and farms to urban centers (cities) in search of jobs
rural-urban migration
cost advantages to producers and consumers from location in cities and towns, which take the form or urbanization economies and localization economies
agglomeration economies
the productive value of a set of social institutions and norms, including group trust, expected cooperative behaviors with predictable punishments for deviations, and a shared history of successful collective action, that raises expectations for participation in future cooperative behavior
Social Capital
Agglomeration effects associated with the general growth of a concentrated geographic region
Urbanization Economies
agglomeration effects captured by particular sectors of the economy, such as finance or autos, as they grow within an area
Localization Economies
an area with relatively high population density that contains a set of closely related activities
City
an action taken by one agent that decreases the incentives for other agents to take similar actions.
Congestion
a theory that explains rural-urban migration as an economically rational process despite high urban unemployment. Migrants calculate and movSSe if this exceeds average rural income
Todaro Migration Model
the part of the urban economy of developing countries characterized by small, competitive, individual or family firms, petty retail trade and services, labor-intensive methods, free entry, and market-determined factor and product prices
informal sector
an equilibrium version of the Todaro migration model that predicts that expected incomes will be equated across rural and urban sectors when taking into account informal-sector activities and outright unemployment
Harris-Todaro Model
the discounted value at the present time of a sum of money to be received in the future
Present Value
Worker separations from employers, a concept used in theory that the urban-rural wage gap is partly explained by the fact that urban modern-sector employers pay higher wages to reduce labor turnover rates and retain trained and skilled workers
Labor turnover
The notion that modern-sector urban employers pay a higher wage than the equilibrium wage rate in order to attract and retain a higher-quality workforce or to obtain higher productivity on the job
Efficiency Wage
process in which the creation of urban jobs raises expected incomes and induces more people to migrate from rural areas
Induced Migration
a government financial incentive to private employers to hire more workers, such as through tax deductions for new job creation
Wage Subsidy
role of cities
-Agglomeration Economies
-Saving on firm-to-firm, firm-to consumer transportation
-Firms locating near workers with skills they need
-Workers locating near firms that need their skills
-Firms benefit from infrastructure
-Firms benefit from knowledge spillovers in their and related industries
