Migration, Policy and Welfare in the Context of Developing Economies : A Simple Extended Family Approach

After giving an overview of the state of migration policy in developing countries with special reference to Pakistan this paper essentially revisits the issue of policy and its effect on rural to urban migration under an extended family theoretical framework. This specific approach is motivated by empirical literature on migration in the context of developing countries which suggests the emergence of spatially separated but economically linked rural and urban households - expanded or extended families. The extended family in this paper consists of two households, the rural-origin and its urban-migrant offshoot. The migrant after leaving the countryside joins relatives in the city who through the assumption of income sharing within households sustain the migrant in case of unemployment. The economic tie linking the two households is remittances flowing from the migrants to the family members left behind. All decisions, migration and remittance, are based on altruism rather then self-interest. Thus in the model both migration and remittances are endogenously determined. This extended family framework is then employed to analyze the effect of the standard policy prescriptions, i.e., urban employment subsidy and a rural income subsidy on migration and urban employment. Also, the welfare effect of a subsidy transfer from urban to rural sector is analyzed. The results, especially in the case of the rural subsidy provision, are qualitatively different from those in the standard Harris-Todaro type literature on migration suggesting the sensitivity of predicted policy effects on the type of methodology employed.migration policy, Pakistan, extended family framework, Harris-Todaro

Rural to Urban Migration and Network Effects in an Extended Family Framework

Literature on migration and network effects suggests that the rate of migration is positively related to the extent or degree of personal and community level networks potential migrants have at the destination. However in this particular paper it is shown that when the decision making unit is the extended family and there is a minimum wage induced Harris-Todaro type job rationing in the urban sector having greater numbers of previous migrants at the urban end does not necessarily lead to more migration from the hinterland. This counter intuitive result is generated as a consequence of juxtaposing an extended family framework with urban equilibrium unemployment in the model. A larger stock of previous migrants at the urban end has a positive effect on new migration which comes specifically through a greater flow of remittance income from the migrants to their rural counterparts - the two households comprising the extended family. The increased remittance income provides a positive stimulus to migration as it relaxes the migration cost constraints facing the extended family. On the other hand limited jobs in the urban sector and the resultant job rationing implies that a greater number of previous migrants also crowds out job opportunities for the new ones thus simultaneously reducing incentives to migrate. The direction of the net effect however depends on the economic characteristics of the extended family and the initial employment conditions in the urban sector.Harris-Todaro, Migration, extended family framework

Services Trade Negotiations in the Doha Round : Opportunities and Risks for Pakistan

This paper seeks to examine how locking-in of Pakistans unilateral liberalization at the WTO/GATS and further liberalization of services trade would affect Pakistans competitiveness. Focusing on the opportunities and risks of such liberalization the paper discusses possible options regarding the corollary regulatory reforms and other flanking measures that may be needed to achieve these goals. The sectors studied in this paper are (a) construction and related engineering services; (b) architecture, engineering and integrated engineering services; (c) energy services; and (d) environmental services.liberalization, Services, regulation, Pakistan

Prospects of Wheat and Sugar Trade between India and Pakistan : A Simple Welfare Analysis

This paper asks how opening up of wheat and sugar trade between two nuclear neighbours, India and Pakistan, would affect welfare in the two countries. We conduct a partial equilibrium analysis to simulate welfare implications of trade between the two countries under three alternative trade regimes : a) under an FTA between India and Pakistan, b) under SAFTA, and c) under a grant of mostfavoured nation (MFN) to India by Pakistan. We conduct simple welfare analysis for wheat, on the basis of real world data of FY2005, and for sugar, based on data for FY 2000-01. In both these years, India had a net surplus and Pakistan had a net deficit for both wheat and sugar. We show that among other things, favourable weather conditions play a critical role in generating these surpluses, which are most likely to get reversed in years when weather conditions become more favourable to Pakistan. While we find there would be net gains to both countries, in case trade happens, the highest welfare gains accrue to both countries under free trade agreement. Further analysis reveals that if subsidies to Indian wheat farmers are removed, their competitive edge disappears in favour of wheat farmers in Pakistan.wheat, sugar, trade, weather conditions, Pakistan, India, subsidies