2. Migration and its determinants
2.2 The emergence of the neoclassical theory of migration
The standard formulation of the neoclassical theory of migration is usually considered to be that put forth by Michael Todaro and John Harris (see below). However, this represented
6 Cf. Lee’s (1966:48) comment to the effect that “This century has brought no comparable [to Ravenstein’s] excursion into migration theory”.
31 the culminating step in a process of theoretical development that had its roots in the work of other authors. Especially prominent among the latter were Everett Lee’s (1966) ‘push- pull’ theory of migrant agency, and Arthur Lewis’ (1954) and Renis and Fei’s (1961) seminal accounts of migration within the specific context of developing countries.
Everett Lee sought to develop “a general schema into which a variety of spatial movements can be placed” (Lee 1966:49) by putting forth a general hypothesis with respect to migrant agency that became known as ‘push-pull theory’. In his own formulation (id ibid:49-50), “the factors that enter into the decision to migrate and the process of migration may be summarised under four headings, as follows: i) factors associated with the area of origin; ii) factors associated with the area of destination; iii) intervening obstacles; and iv) personal factors”. He thus conceptualised the decision to migrate as the result of a cost-benefit comparison between the attractive and repulsive features of both areas, though this comparison and the enactment of its results are constrained by “natural inertia”, distance, information, personal factors, etc. (id ibid:51). This renders clear why it is that the rational-choice foundations of neoclassical economics’ later formulations of migrant agency are often traced back to Lee, even though this author himself stressed that
“the decision to migrate is never completely rational, and for some persons the rational component is much less than the irrational” (id ibid:51).
Another key foundation of neoclassical migration theory consisted of the work of Arthur Lewis, although the role played by this author in this process may be considered somewhat puzzling – especially because the most commonly cited of his articles in this context (Lewis 1954) did not seek to put forth a theory of the determinants of migration as such, instead addressing the phenomenon of migration in the context of the broader process of economic development. Indeed, the focus of Lewis’ seminal article was on the economic duality characteristic of underdeveloped countries, whereby a traditional sector characterised by the existence of redundant labour and low capital-labour ratios co-exists with a modern sector characterised by higher levels of capital intensity. In this model, the different capital-labour ratios in the two sectors entail different marginal productivities of labour, implying different wage levels, which in turn encourage the workers in the traditional sector (especially redundant ones) to migrate to the modern sector (which is most often spatially concentrated in cities). This enabled Lewis to suggest that: i) the process of economic development inherently involves the absorption by the modern sector of the “surplus labour” from the traditional sector; and ii) the competition undertaken by the migrant workers enables the modern sector to lower its wages to the level practised in
32 the traditional sector, thus explaining the high profits and capital rents that characterise the modern sector in these countries. The key element to be subsequently retained by the neoclassical theoretical account of migration, however, was the fact that spatial movements were principally determined by differential factor returns – a mere simplifying hypotheses in Lewis’ model.
Gustav Ranis and John Fei (1961) then drew heavily on the work of Lewis and explicitly reaffirmed that “development consists of the re-allocation of surplus agricultural labor, whose contribution to output may have been zero or negligible, to industry where they become productive members of the labor force at a wage equal (or tied) to the institutional wage in agriculture” (Ranis and Fei 1961:533). The main aim of their paper was to incorporate “a satisfactory analysis of the subsistence or agricultural sector” into Lewis’
model. In summary terms, they did this by positing the existence, during the initial “stages”
of development, of an institutional wage, set by non-competitive forces, in the traditional sector. As the absorption of labour by the modern sector proceeds, a point is reached when the marginal productivity of labour in the agricultural sector is equal to or greater than the institutional wage. According to these authors, that point marks not only the “full commercialisation of the agricultural sector”, but also “a non-arbitrary criterion for an economy reaching the threshold of so-called self-sustaining growth” (id ibid:537).
Lewis’ and Ranis and Fei’s models were thus models of development more generally, in which migration only played a supporting role, but they were to constitute important foundations of Todaro and Harris’s model of rural-urban migration, which came to be considered, and abundantly cited ever since, as the neoclassical model of migration par excellence (Todaro 1969 and 1976, Harris and Todaro 1970). These authors thus put forth a full-fledged “behavioural model of rural-urban labor migration”, in which “the percentage change in the urban labor force during any period is governed by the differential between the discounted streams of expected urban and rural real income”
(Todaro 1969:141). Because migration is deemed to potentially take place from rural to urban areas, the migration decision-making process in this model is depicted as a comparison between the discounted future streams of real rural income, which are known by the potential migrants, and the discounted future streams of the income that those migrants expect to earn by migrating to the cities (defined as the urban real income weighed by the probability of employment). Todaro and Harris’ model presents itself as a
“behavioural model of migration” that seeks to account for ‘macro’ outcomes by aggregation of individual (optimising) decisions. In that sense, it is a typical
33 methodologically-individualist neoclassical model. The ‘macro’ consequences, then, are that migration serves as an optimal resource-allocation mechanism, whereby labour is transferred from labour-abundant to labour-scarce regions, and factor returns are equalised.
Interestingly, the Todaro-Harris model came after a considerably less-cited, but arguably more realistic, neoclassical behavioural model – Sjaastad’s (1962) “investment”
model. This model proposes to “treat migration as an investment increasing the productivity of human resources” (id ibid:83), whereby workers incur in the “money and non-money” costs associated with the migration process, under the expectation of increasing the lifetime (money and non-money) returns to their provision of labour and choice of location. However, due to the difficulty of measuring or estimating the non- monetary costs and returns, as well as to the existence of “barriers to the free movement of labor” (id ibid:91), Sjaastad is careful not to derive “macro” implications by simple aggregation. His model is thus closer to Lee’s – more realistic than Harris and Todaro’s, but also less powerful (and ultimately less popular), arguably due to the incongruent attempt to add realism to an approach that, for its methodologically-individualist and rational-choice foundations, is intrinsically unrealistic.
When we examine the gradual emergence of the ‘standard’ neoclassical theory of migration, it is perhaps puzzling how the Todaro-Harris model came to be considered its quintessential representative, for it may be regarded as considerably more oversimplifying and less realistic than other methodologically-individualist models of migration put forth at roughly the same time (namely Sjaastad’s and Lee’s). Its rise to the status of
‘representative’ model to the detriment of other models is interesting in that it suggests the often superior power and popularity of (overly) simple and (over-)simplifying ideas.