Economics, Equity and Urban-Rural Transfers

Abstract

Suppose that changing technology, patterns of trade, and prices have created a situation that, left unchecked by decisive government action, would result in a migration from rural to urban areas. Should the government take an active role to discourage migration, through subsidizing agriculture either through direct payments or through the provision of infrastructure that otherwise would not pass a standard cost-benefit test? Should the government provide such social goods as hospitals and schools to rural areas to a degree unwarranted by the population distribution, again in an effort to stem the flow of migration from rural to urban areas?