LABOR MIGRATION AND URBANIZATION IN COLOMBIA

The rapid growth of cities in less developed countries, clearly connected to movements of population from rural to urban areas, has been studied from different points of view. This dissertation draws from three main bodies of the literature on the subject, in order to arrive at a general equilibrium model for the study of migration. The first one, is the literature that emphasizes the migrant's ability to perceive unemployment probabilities in the city, before deciding to migrate. Thus decisions are based on real-expected rural-urban differentials, where real-expected is defined from a probabilistic point of view, using probabilities of urban unemployment. The second one, deals with what has been called the "informal sector". This is an economically active sector assumed to employ labor not absorbed by modern sectors. An important characteristic of this sector seems to be low productivity of labor. The third one, is the literature that uses simulation models for the analysis of aggregate, less developed economies.;The dynamic part of the model determines the changes in the factors of production between periods. By using the growth of labor in each sector and the real expected differentials of income between rural and urban areas, the flow of migration is found, with the use of an exponential migration equation.;With the purpose of estimating a number of the parameters of the model, the manufacturing sector of Colombia is studied in some detail. A time series of the capital stock of the sector is estimated together with the real rate of return of the stock in each year. The results are used with data on labor in the sector, in order to make an econometric estimation of a two-level CES production function.;Dynamic system simulation techniques are used, in order to obtain a baseline run of the economy of Colombia and to obtain simulations of several government policies that affect migration in different ways. The results of the simulations show that, changes in parameters that affect the structure of growth of the economy, cause long term effects in the rhythm of rural-urban movements of population. However, changes in parameters, such as the propensity to migrate or the cost of migration, that are not related to the structure of growth of the economy, cause damped cyclical behavior, with long term rates of migration that are very similar to the baseline run.;By considering the simultaneous relationships between migration and the various economic factors associated with it, a general equilibrium model is developed, composed of three sectors: one rural and two urban sectors, modern and informal. The assumption of profit maximizing entrepreneurs is adopted and factors of production are paid their marginal product. Skilled labor is assumed to be totally absorbed by the modern urban sector, while land is assumed to be used only by the rural sector. All sectors are assumed to use a capital stock and unskilled labor in the process of production. The distribution of the urban unskilled labor force between the two urban sectors is determined by an exogenously set minimum wage rate, that applies to the modern sector. However, labor income in the informal sector is required to be at least at a subsistence level. This is achieved by transfers if the marginal product is too low. The static part of the model is completed by defining savings, investment and consumption demand equations and establishing the requirement of equality between supply and demand through a system of relative prices.