Intersectoral Migration of Agricultural Labor Force and Business Cycles in the Developing Countries

SCID Working Paper 402



This paper establishes a framework to analyze short-run macroeconomic cycles with intersectoral migrations of agricultural labor in the developing economies. It first defines indicators to measure the migration and finds its cyclical fluctuations combined with business cycles. A model of the labor and commodity markets is set up to investigate equilibrium mechanisms of intersectoral migration as well as fluctuations and adjustments of price and migration in response to shocks. It shows flexible prices and wage rates with labor mobility can lead to a new equilibrium, but the economy may experience booms and slowdowns with return migrations of agricultural labor.

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