1. Rural-urban Migration and Poverty in Kenya: is Agriculture the Answer?
Maria Sassi
Dep. of Business
University of Pavia
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.

2. 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

3. 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:

4. New Economics of Labour Migration (2/2)
Remittances allocation
in rural areas
Internal migration
and
rural development
Need for economic analysis
and justification
Rural development
policies for poor hhs
without migrants
MIGRATION POLICY GOAL
Accommodate migration
flows while preventing
the widening of rural
and urban imbalaces
Agricultural
policies

5. 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
Tech. efficiency ch.
My analysis wants to provide a preliminary contribution to this debate providing an empirical analysis focused 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 with the introduction of migration flows restrictions and urban wage subsidies and a very little attention to rural areas or the introduction of policies with very little impact on rural development.
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. This explains my interest in simulating a technological efficiency change in agriculture
In my empirical analysis I have adopted CGE approach because as underlined by the theoretical literature on migration ther is the need for understanding how a set of policies affects income, outuput and employment in both urban and urban areas and sectors simultaneously.
I am not entering in to the model details due to time restriction, however the 5 sectors CGE model I have developed for Kenya accommodates 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

6. SAM revision Basic SAM RevisedSAM 50 activities and commodities
Agriculture;
Food industry;
Industry others;
Service sector;
Public Administration, Health
& Education
50 activities and
commodities
Now I’m try to disaggragete capital accout.
Rural Slkilled, Semi-skilled
and Unskilled;
Urban Slkilled, Semi-skilled
and Unskilled
(Labour force survey,
Central Bureau of Statistics)
Labour factors:
Skilled;
Semi-skilled
Unskilled;

7. Simulations Rural-urban migration Best scenario for rural migrants
10% rural skilled to urban skilled
Rural-urban
migration
10% rural semiskilled to urban semiskilled
10% rural unskilled to urban unskilled
At the existing rural urban wage differential,
there exixts an effective demand
for migrant labour service proxied by the unit
ptobability of securing an urban job.
Within this framework I have simulated two typologies of external shocks:
The former refers to rural-urban migration;
The latter technical efficiency change in agriculture.
The assumption is that
at the existing rural urban wage differential, there exists an effective demand for migrant labour service proxied by the unit probability of securing an urban job. There is no unemployment. Rural labour migrates in such a way that its supply exactly matches the quantity of effective demand generated in urban areas. There are no differences in information available to rural labour; nevertheless, there exist differences in preferences for urban employment as embodied in labour skills.
Best scenario for rural migrants
There is NO
unemployment, and
differences in information.
There exist differences in
preferences for
urban employment as
embodied in labour skills

8. 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
Within this framework I have simulated two typologies of external shocks:
The former refers to rural-urban migration;
The latter technical efficiency change in agriculture.
The assumption is that
at the existing rural urban wage differential, there exists an effective demand for migrant labour service proxied by the unit probability of securing an urban job. There is no unemployment. Rural labour migrates in such a way that its supply exactly matches the quantity of effective demand generated in urban areas. There are no differences in information available to rural labour; nevertheless, there exist differences in preferences for urban employment as embodied in labour skills.
Technical
efficiency change
50% increase in intermediate input specific efficiency in agricultural production function (agricultural, food industry, other industry and service inputs)

9. Rural - urban migration
No significant impact

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

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

12. Impact on income - current prices (%)
10% increase in efficiency of agricultural production function
Impact on income - current prices (%)
Increase in
rich-poor
disparities
Reduction in
rural-urban
disparities
Households by expenditure decile - (I=low; X=high)

13. Impact on consumption – constant prices (%)
10% increase in efficiency of agricultural production function
Impact on consumption – constant prices (%)

14. Share of households consumption by product
3.8
-5.3
1.7
1.6
5.3

15. Impact on macroeconomic indicators (%)
10% increase in efficiency of agricultural production function
Impact on macroeconomic indicators (%)
Impact on exports (%)

16. Impact on gross product at factor costs (%)
10% increase in efficiency of agricultural production function
Impact on gross product at factor costs (%)

17. 10% increase in efficiency of agricultural production function
Impact on wages (%)

18. Technical efficiency change
50% increase in
intermediate input specific
efficiency in agricultural
production function
Impact on Hhs income (% change)
Households by expenditure decile
(I=low; X=high)

19. Agricultural inputs
Food industry inputs
Industry other inputs
Service inputs

20. Impact on macroeconomic indicators - current prices (% change)

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

22. 10% increase in intermediate service input efficiency in agricultural production function
Impact on wages (%)

23. Conclusions (1/3) Role of rural-urban No impact on income migration
and development
Micro
analysis
Macro
analysis
integration

24. Conclusions (2/3) Rich-poor and rural-urban inequalities?
Support to overall
economc development
Key role of
thechnical progres
Increase in
households welfare
Rich-poor and
rural-urban
inequalities?

25. Conclusions (3/3) Reduction in agricultural prices Increase in
Farmers return
& livelihoods
Increase in
labour cost
Withdrawl from
agriculture
Liberalization &
Price fluctuations

26. 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

27. 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.

28. 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

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