Rapid Rural-Urban Migration and the Rural Economy in Korea (Written in Korean)
Two opposing views prevail regarding the economic impact of rural out-migration on the rural areas of origin. The optimistic neoclassical view argues that rapid rural outmigration is not detrimental to the income and welfare of the rural areas of origin, whereas Lipton (1980) argues the opposite. We...
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| Format: | Article |
| Language: | English |
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Korea Development Institute
1990-11-01
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| Series: | KDI Journal of Economic Policy |
| Online Access: | https://doi.org/10.23895/kdijep.1990.12.3.27 |
| _version_ | 1819054041568641024 |
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| author | 이, 번송 |
| author_facet | 이, 번송 |
| author_sort | 이, 번송 |
| collection | DOAJ |
| description | Two opposing views prevail regarding the economic impact of rural out-migration on the rural areas of origin. The optimistic neoclassical view argues that rapid rural outmigration is not detrimental to the income and welfare of the rural areas of origin, whereas Lipton (1980) argues the opposite. We developed our own alternative model for rural to urban migration, appropriate for rapidly developing economies such as Korea's. This model, which adopts international trade theories of nontraded goods and Dutch Disease to rural to urban migration issues, argues that rural to urban migration is caused mainly by two factors: first, the unprofitability of farming, and second, the decrease in demand for rural nontraded goods and the increase in demand for urban nontraded goods. The unprofitability of farming is caused by the increase in rural wages, which is induced by increasing urban wages in booming urban manufacturing sectors, and by the fact that the cost increases in farming cannot be shifted to consumers, because farm prices are fixed worldwide and because the income demand elasticity for farm products is very low. The demand for nontraded goods decreases in rural and increases in urban areas because population density and income in urban areas increase sharply, while those in rural areas decrease sharply, due to rapid rural to urban migration. Given that the market structure for nontraded goods―namely, service sectors including educational and health facilities is mostly in monopolistically competitive, and that the demand for nontraded goods comes only from local sources, the urban service sector enjoys economies of scale, and can thus offer services at cheaper prices and in greater variety, whereas the rural service sector cannot enjoy the advantages offered by scale economies. Our view concerning the economic impact of rural to urban migration on rural areas of origin agrees with Lipton's pessimistic view that rural out-migration is detrimental to the income and welfare of rural areas. However, our reasons for the reduction of rural income are different from those in Lipton's model. Lipton argued that rural income and welfare deteriorate mainly because of a shortage of human capital, younger workers and talent resulting from selective rural out-migration. Instead, we believe that rural income declines, first, because a rapid rural-urban migration creates a further shortage of farm labor supplies and increases rural wages, and thus reduces further the profitability of farming and, second, because a rapid rural-urban migration causes a further decline of the rural service sectors. Empirical tests of our major hypotheses using Korean census data from 1966, 1970, 1975, 1980 and 1985 support our own model much more than the neoclassical or Lipton's models. A kun (county) with a large out-migration had a smaller proportion of younger working aged people in the population, and a smaller proportion of highly educated workers. But the productivity of farm workers, measured in terms of fall crops (rice) purchased by the government per farmer or per hectare of irrigated land, did not decline despite the loss of these youths and of human capital. The kun having had a large out-migration had a larger proportion of the population in the farm sector and a smaller proportion in the service sector. The kun having had a large out-migration also had a lower income measured in terms of the proportion of households receiving welfare payments or the amount of provincial taxes paid per household. The lower incomes of these kuns might explain why the kuns that experienced a large out-migration had difficulty in mechanizing farming. Our policy suggestions based on the tests of the currently prevailing hypotheses are as follows: I) The main cause of farming difficulties is not a lack of human capital, but the increase in production costs due to rural wage increases combined with depressed farm output prices. Therefore, a more effective ... |
| first_indexed | 2024-12-21T12:45:19Z |
| format | Article |
| id | doaj.art-e02ae5b15ad84becb6a167be99b84697 |
| institution | Directory Open Access Journal |
| issn | 2586-2995 2586-4130 |
| language | English |
| last_indexed | 2024-12-21T12:45:19Z |
| publishDate | 1990-11-01 |
| publisher | Korea Development Institute |
| record_format | Article |
| series | KDI Journal of Economic Policy |
| spelling | doaj.art-e02ae5b15ad84becb6a167be99b846972022-12-21T19:03:39ZengKorea Development InstituteKDI Journal of Economic Policy2586-29952586-41301990-11-01123274510.23895/kdijep.1990.12.3.27Rapid Rural-Urban Migration and the Rural Economy in Korea (Written in Korean)이, 번송Two opposing views prevail regarding the economic impact of rural out-migration on the rural areas of origin. The optimistic neoclassical view argues that rapid rural outmigration is not detrimental to the income and welfare of the rural areas of origin, whereas Lipton (1980) argues the opposite. We developed our own alternative model for rural to urban migration, appropriate for rapidly developing economies such as Korea's. This model, which adopts international trade theories of nontraded goods and Dutch Disease to rural to urban migration issues, argues that rural to urban migration is caused mainly by two factors: first, the unprofitability of farming, and second, the decrease in demand for rural nontraded goods and the increase in demand for urban nontraded goods. The unprofitability of farming is caused by the increase in rural wages, which is induced by increasing urban wages in booming urban manufacturing sectors, and by the fact that the cost increases in farming cannot be shifted to consumers, because farm prices are fixed worldwide and because the income demand elasticity for farm products is very low. The demand for nontraded goods decreases in rural and increases in urban areas because population density and income in urban areas increase sharply, while those in rural areas decrease sharply, due to rapid rural to urban migration. Given that the market structure for nontraded goods―namely, service sectors including educational and health facilities is mostly in monopolistically competitive, and that the demand for nontraded goods comes only from local sources, the urban service sector enjoys economies of scale, and can thus offer services at cheaper prices and in greater variety, whereas the rural service sector cannot enjoy the advantages offered by scale economies. Our view concerning the economic impact of rural to urban migration on rural areas of origin agrees with Lipton's pessimistic view that rural out-migration is detrimental to the income and welfare of rural areas. However, our reasons for the reduction of rural income are different from those in Lipton's model. Lipton argued that rural income and welfare deteriorate mainly because of a shortage of human capital, younger workers and talent resulting from selective rural out-migration. Instead, we believe that rural income declines, first, because a rapid rural-urban migration creates a further shortage of farm labor supplies and increases rural wages, and thus reduces further the profitability of farming and, second, because a rapid rural-urban migration causes a further decline of the rural service sectors. Empirical tests of our major hypotheses using Korean census data from 1966, 1970, 1975, 1980 and 1985 support our own model much more than the neoclassical or Lipton's models. A kun (county) with a large out-migration had a smaller proportion of younger working aged people in the population, and a smaller proportion of highly educated workers. But the productivity of farm workers, measured in terms of fall crops (rice) purchased by the government per farmer or per hectare of irrigated land, did not decline despite the loss of these youths and of human capital. The kun having had a large out-migration had a larger proportion of the population in the farm sector and a smaller proportion in the service sector. The kun having had a large out-migration also had a lower income measured in terms of the proportion of households receiving welfare payments or the amount of provincial taxes paid per household. The lower incomes of these kuns might explain why the kuns that experienced a large out-migration had difficulty in mechanizing farming. Our policy suggestions based on the tests of the currently prevailing hypotheses are as follows: I) The main cause of farming difficulties is not a lack of human capital, but the increase in production costs due to rural wage increases combined with depressed farm output prices. Therefore, a more effective ...https://doi.org/10.23895/kdijep.1990.12.3.27 |
| spellingShingle | 이, 번송 Rapid Rural-Urban Migration and the Rural Economy in Korea (Written in Korean) KDI Journal of Economic Policy |
| title | Rapid Rural-Urban Migration and the Rural Economy in Korea (Written in Korean) |
| title_full | Rapid Rural-Urban Migration and the Rural Economy in Korea (Written in Korean) |
| title_fullStr | Rapid Rural-Urban Migration and the Rural Economy in Korea (Written in Korean) |
| title_full_unstemmed | Rapid Rural-Urban Migration and the Rural Economy in Korea (Written in Korean) |
| title_short | Rapid Rural-Urban Migration and the Rural Economy in Korea (Written in Korean) |
| title_sort | rapid rural urban migration and the rural economy in korea written in korean |
| url | https://doi.org/10.23895/kdijep.1990.12.3.27 |
| work_keys_str_mv | AT ibeonsong rapidruralurbanmigrationandtheruraleconomyinkoreawritteninkorean |