Population Growth and Economic Development Policy Questions (1986) / Chapter Skim
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8 Will slower population growth facilitate the absorption of workers into the modern economic sector and alleviate problems of urban growth?
8 Will slower population growth facilitate the absorption of workers into the modern economic sector and alleviate problems of urban growth?
Pages 66-77
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From page 66... ...
Urban labor markets and city growth interact with one another and with other markets and are affected by public policy so that the overall role of population growth cannot be easily determined. In considering the effect of population grown on labor markets and urban conditions in developing countries, one might define the overall development process in terms of three related processes.
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From page 67... ...
City growth rates are the percentage change in the absolute number of people living in a given city or group of cities; increases in urbanization refer to a growing proportion of a national population living in urban areas. It is also useful to differentiate between urbanization patterns exhibiting a high degree of primacy, in which a large proportion of all urban residents live in the largest city, and more diffuse patterns.
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From page 68... ...
The principal demographic source of increasing urbanization is rural-urban migration. Although rapid population growth was once thought to be an important cause of rural-urban migration, with rural poverty due to excess labor supply providing a"push" to the cities (e.g., Lewis, 1954)
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From page 69... ...
This narrows the real rural-urban wage gap, slowing migration and the pace of urbanization (Kelley and Williamson, 1984~. As development prods, modern sector economic activity diversifies, and the urban sector diffuses into an integrated system of cities, each tending toward specialization in some set of economic activities (Henderson, 1984, 1985~.
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From page 70... ...
One reason cited for the lower proportion of industrial employment in developing countries relative to the comparable period in the history of the now-developed countries is the labor-saving bias in the former, in spite of abundant labor (Todaro and Stilkind, 1981~. Indeed, industrial labor productivity in the developing countries grew at an annual rate of 4.6 percent in the 1960s, compared with a 2.0 percent rate for the relevant countries during the last 20 years of the nineteenth century.
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From page 71... ...
RAPID POPULATION GROWTH AND LABOR MARKETS A widely noted characteristic of urban labor markets in developing countries is some~degree of segmentation. The modern sector generally consists of physical and human capital-intensive industrial and service activities and pays relatively high wages, while the 'informal" sector consists of laborintensive small manufacturing or service businesses and self-employed workers, typically requiring fewer skills and paying relatively low wages.
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From page 72... ...
In contrast to relatively well-off job seekers able to afford unemployment during a search for modern sector employment, most low-skilled urban workers are obliged to accept employment in Me informal sector (Linn, 1983:37~. Since some employment in this sector represents spillover from modem sector labor markets unable to absorb growth in the urban labor force, it has been characterized as underemployment or disguised unemployment (e.g.
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From page 73... ...
emphasize that low wages in the informal sector are the prime cause of the income inequality and poverty of urban populations in developing countries. Even though rapid labor force grown typically results in lower wages than would otherwise prevail in urban labor markets, both in the modem and informal sectors, it is important to note that most urban workers are probably at least as well off as they might be in rural areas.
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From page 74... ...
distinguish two basic trade strategies: import substitution and export-oriented manufacturing. Large developing countries with significant primary resources have typically followed the former strategy, using overvalued exchange rates and taxes on primary exports to subsidize imported capital goods, with quotas or protective tariffs on imported goods that are also manufactured domestically.
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From page 75... ...
The cost of urban transportation tends to increase with city size because of the increasing costs of land (Linn, 1983:99) , so that the public provision of roads tends to lag behind urban population growth.
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From page 76... ...
CONCLUSIONS Lois review emphasizes the distinction between increasing urbanization and population growth to simplify the complex relationships between these demographic processes, labor markets, and the benefits and costs of large cities in developing countries. Urbanization, produced primarily by rural-urban migration, plays an important beneficial role in the development process, providing an increasing share of We population with access to relatively high-wage employment, education, heals care, and other modern public services.
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From page 77... ...
URBAN GROWTH 77 problems, stained providers of subsidized services, and possibly slowed the growth of He share of workers who are in the modern wage sector, slower population growth will probably not, by itself, solve these problems. A first step toward slowing excessive urban growth would involve reducing the public sector's disproportionate subsidies for urban residents and urbanbased economic activities.
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