Rural-urban Migration and Poverty in Kenya: is Agriculture the Answer? Maria Sassi The aim of my presentation is the understanding of the impact of rural-urban migration on economic development and poverty in Kenya and the role ot technical efficiency change in agriculture.

Importance of the topic Rural-urban migration Sub-Saharan Africa Social, economic, political problems of major significance Rural-urban migration is of particular concern in Developing countries and particularly in SSA where the migration of hundreds of millions of rural people to cities in these chiefly agrarian countries is creating the social, economic and political problems of major significance. For many years the economic development literature has viewed rural-urban migration favourably, but today, it is also recognised that the phenomenon should go with suitable policy intervention in rural areas. Agrarian countries

Theoretical literature (1/2) Dual economy Models (1950s-1960s) Todarian Frameworks (1970s-1980s) New Economics of Labour Migration (form 1990s) The theoretical debate and its consequence policy recommendations can be articulated in three types of contributions. Those referred to:

New Economics of Labour Migration (2/2) Remittances allocation in rural areas Internal migration and rural development Rural development policies for non migrant MIGRATION POLICY GOAL Accommodate migration flows while preventing the widening of rural and urban imbalaces Agricultural policies

Focus of the analysis - Rural migrant: 70% of urban labour force; Specific policy interventions; Poverty: 54% & 80% in rural areas. Kenya The “growth sector” (24% GDP, 53% exports; 62% labour force); -Increase in productivity. Agriculture My analysis wants to contribute to this debate ad it focuses on: Kenya that provides a natural experiment to study rural-urban migration because rural migrants constitute a significant proportion of urban labour force, about 70%. And over time the phenomenon has been object of specific policy interventions mainly of Todarian nature: migration flows restrictions and urban wage subsidies. More recently, with the Poverty reduction strategy paper and the commitment of the country on the MDGs there has been a change of focus: agriculture is seen as the “growth sector” and it has been underlined the need for specific policies particularly aimed at increasing agricultural productivity. - CGE approach: the change of focus in theoretical literature support the shift from partial approaches for the analysis of rural urban migration policies the general equilibrium approaches able to understand how a set of policies affects income, outuput and employment in both urban and urban areas and sectors simultaneously. The CGE multisector model I have developed for Kenya accommodate the 2003 SAM elaborated in 2006 by Kiringai, Thurlow, Wanjale that I have duly reviewed according to the aim of the analysis; The IAKE-CGE model works simulation the interaction of various economic actors across markets as specified in the neoclasical GE theory. Impact of migration policies on income, output & employment in both urban and rural areas & sectors SIMULTANEOUSLY CGE approach 2003 SAM

10% rural skilled to urban skilled Simulations 10% rural skilled to urban skilled Rural-urban migration 10% rural semiskilled to urban semiskilled 10% rural unskilled to urban unskilled 10% increase in efficiency of agricultural production function I have simulated two typologies of external shocks: The former refers to rural-urban migration; The latter technical efficiency change in agriculture. Technical efficiency change 50% increase in input specific efficiency of agricultural production function (agricultural, food industry, other industry and service inputs)

Rural - urban migration No significant impact

Households by expenditure decile 10% rural migration: Impact on income (% change) - Households by expenditure decile (1=low; 10=high)

Technical efficiency change 10% increase in efficiency of agricultural production function

Impact on income - current prices (%) 10% increase in efficiency of agricultural production function: Impact on income and consumption (% change) - Households by expenditure decile (1=low; 10=high) Impact on consumption - constant prices (%)

10% increase in efficiency of agricultural production function Impact on gross product at factor costs (% change) Impact on rural labour Current prices (%) Wages (price index 1= base year)

10% increase in efficiency of agricultural production function Impact on macroeconomic indicators (% change)

10% increase in efficiency of agricultural production function Impact on domestic production and exports (% change)

Technical efficiency change 50% increase in input specific efficiency of agricultural production function

Impact on income (% change) Households by expenditure decile (1=low; 10=high)

Agricultural inputs Food industry inputs Industry other inputs Service inputs

Impact on macroeconomic indicators - current prices (% change)

Impact on gross product at factor costs - current prices (% change)

Conclusions

Conclusioni Attivazione processo di crescita complessivo Importanza del progresso tecnico Redditi delle famiglie agricole crescono meno di quelli delle non agricole Miglioramento del benessere delle famiglie Aumento delle diseguaglianze Problema del debito pubblico e del sostegno deficit della bilancia dei pagamenti Effetti depressivi del processo di accumulazione che accompagna il progresso tecnico Effetti su tassi di interesse e inflazione

Theoretical literature (1/3) Dual economy models - Initial stage of development; - Intensive agricultural economy; - Lack of capital & surplus of agricultural labour the needed manpower for industrialization. Todarian frameworks New Economics of labour migration Rural urban migration facilitation to favour economic take-off

Theoretical literature (1/4) - Understanding of the reasons of urban unemployment and its link with rural-urban migration Dual economy models Todarian frameworks - Migration flows restrictions; - Wage subsidies Uniform wage subsidies B-S; B Urban wage subsidies Compensations to rural areas H-T New Economics of Labour Migration Job creation in rural areas & inequalities F.

Theoretical literature (1/5) Support to R-U migration Increasing efficiency in job matches Dual economy models - Who, when and how to migrate Todarian frameworks - Internal migration and rural development Remittancies; Policies for rural development. New Economics of Labour Migration

Migration policies in Kenya a. Colonial period b. Post-colonial period Kenyatta presidency (1963-1979) Moi presidency (1979-2002) Kibaki presidency (from 2002)