Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/268097 
Year of Publication: 
2022
Series/Report no.: 
ZEF Discussion Papers on Development Policy No. 321
Publisher: 
University of Bonn, Center for Development Research (ZEF), Bonn
Abstract: 
We study a developing countries setting in which agglomeration efficiency of urban production attracts rural-to-urban migration, whereas urban pollution deters rural-to-urban migration. By means of a general equilibrium model we study the formation of policies aimed at striking a socially optimal balance between supporting efficient levels of urban agglomeration and mitigating urban pollution in the presence of endogenous rural-to-urban migration. We show that without government intervention, although rural-to-urban migration contributes to agglomeration economies, it does not improve social welfare because it also exacerbates environmental degradation. We also show that urban pollution problems cannot be resolved by means of environmental regulation alone: for example, an emissions tax aimed at curbing urban pollution can backfire as and when it increases the appeal of rural-to-urban migration. A policy of emissions tax in conjunction with a subsidy to rural individuals is an effective means of enhancing urban productivity while reducing urban pollution.
Subjects: 
Rural-to-urban migration
Industrial emissions
Polluting urban agglomeration
Environmental regulation
Policy formation
JEL: 
H23
J61
O15
R23
Document Type: 
Working Paper

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