Urbanization, population transition, and growth

This paper analyzes a dual economy consisting of urban marketareas and less developed rural areas with or without local markets.Urban areas have better opportunities for earnings and educationthan rural areas. Rural families choose whether to move to urbanareas at costs that differ from location to location. As percapita output grows relative to the moving cost, urbanizationproceeds, leading to lower fertility, more investments in humanand physical capital per child relative to output per worker,and faster economic growth. These impacts are stronger if ruralareas have no access to markets.