| Twenty percent of poor men born in Brazil’s Northeast— one of the country’s lagging areas—now live in its prosperous Southeast. A large demographic shift occurred from villages to towns and cities in the 1970s, and from towns to cities in the 1990s. |
Economists have long argued that migration decisions are motivated by the possibility of earning higher wages. But since many migrants do not find jobs after moving, this attraction may be irrational. Some policy makers in developing countries believe that rather than adding to the economy in their new neighborhoods, migrants subtract from them by worsening the problems of livability. This belief has resulted in deterrents ranging from disincentives to draconian regulations to limit the movement of people.
Recent empirical evidence from four decades of Brazilian census data shows something different. Working-age men migrated not only to look for better jobs but also to get better access to basic public services such as piped water, electricity, and health care. Results from models of migration behavior that focus only on the migrant’s desire to move in search of better jobs can be biased, because places with better public services also have more job opportunities. Firms like to locate where workers would like to live. By ignoring the importance of public services, some econometric estimates may overstate a migrant’s willingness to move in response to wage differences.
To determine how much public services matter, a rich data set of public services at the municipality level was combined with individual records from the Brazilian census to evaluate the relative importance of wage differences and public services in the migrant’s decisions to move.
Predictably, wage differences are the main factor influencing migration choices. For the better off, basic public services are not important in the decision to move. But for the poor, differences in access to basic public services mattered.
In fact, poor migrants are willing to accept lower wages to get access to better services. A Brazilian minimum wage worker earning R$7 per hour (about US$2.30 in February 2008) was willing to pay R$420 a year to have access to better health services, R$87 for better water supply, and R$42 for electricity. Poor migrants are rational.
Contributed by Somik Lall and Christopher Timmins.