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Frontiers of Economics in China

Front Econ Chin    2013, Vol. 8 Issue (3) : 337-361     DOI: 10.3868/s060-002-013-0018-9
research-article |
The Choice of Technology and Rural-Urban Migration in Economic Development
Haiwen Zhou()
Department of Economics, Old Dominion University, Norfolk, VA 23529, USA
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Abstract

This paper studies a general equilibrium model of rural-urban migration in which manufacturing firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Urban residents incur commuting costs to work in the Central Business District. Surprisingly a change in the size of the population or an increase in the exogenously given wage rate will not affect a manufacturing firm’s choice of technology. This helps to explain why firms in developing countries may not adopt labor intensive technologies even under abundant labor supply. An increase in the number of manufacturing firms increases both the employment rate and the level of employment in the manufacturing sector. However, manufacturing firms choose less advanced technologies. Capital accumulation leads manufacturing firms to choose more advanced technologies, but may not increase employment in the manufacturing sector.

Keywords economic development      the choice of technology      rural-urban migration      increasing returns      urbanization     
Corresponding Authors: Haiwen Zhou,Email:hzhou@odu.edu   
Issue Date: 05 September 2013
 Cite this article:   
Haiwen Zhou. The Choice of Technology and Rural-Urban Migration in Economic Development[J]. Front Econ Chin, 2013, 8(3): 337-361.
 URL:  
http://journal.hep.com.cn/fec/EN/10.3868/s060-002-013-0018-9
http://journal.hep.com.cn/fec/EN/Y2013/V8/I3/337
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