Todaro's Migration Model

Thang explained this model to me today, he has to give a presentation to his Macro class and he wanted to see if he could make it comprehensible in English.

This model purports to explain the pattern of migration from rural areas to urban areas. In developing economies, rural workers who consider themselves to have high human capital flock to the city. (The streets are paved with gold, you know.)

If they are unable to find work in the formal urban economy, they either end up in the informal urban economy, or unemployed. In Vietnam, the wages are highest in the formal economy, lowest in the rural economy, and the informal urban economy, or what we would call the underground economy, they are somewhere in the middle. We think. Who would know what they really are?

What should the government should do about the informal economy? The literature suggests that people would prefer the higher wages and legitimacy of the formal economy, but there are not enough jobs to go around.
The informal economy isn't all bad news. On the upside, it means people are working and this increases welfare and avoids social problems. On the downside the government is not collecting any tax, except for VAT.

No taxes, no improved infrastructure, no welfare, less unemployment.
Half a loaf is better than no bread.

Looking for money

The student surveys are trickling back in, and the results are quite interesting. Despite having been told by the administration that the students won't take loans out, the surveys indicate some interest. (no pun intended.)

Next week I am meeting with a representative from USAID who have a risk sharing model that they have implemented with some success in Panama. I hope to have a good sample of student surveys to guide our discussion.

Nearly all the respondants so far have jobs, but little or no credit history. Today I intend to find out which local lenders would buy this risk. Sounds simple, doesn't it? I have a funny feeling it will be anything but....

Yellow Pages Hanoi

For good concrete laying, call Mr Hung.....

Interesting Vietnam Facts

The population is 83,ooo,ooo.
GDP is currently around USD 45,000,000 and growing.
90% of the population is literate.
Between 2000 and 2003 the number of mobile phones in Vietnam grew from 41.7 to 87.8 (per thousand people.)

29% of the population are below the National Poverty Line.

As per the poverty line, an urban resident who earns VND230,000 (USD15.3) or less a month and a rural resident earning VND200,000 (USD12.7) or less will be considered poor.

34% of children under the age of 5 suffer from malnutrition.