Title
Social influence, agent heterogeneity and the emergence of the urban informal sector Social influence, agent heterogeneity and the emergence of the urban informal sector
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Amsterdam ,
Subject
Physics
Source (journal)
Physica: A: theoretical and statistical physics. - Amsterdam
Volume/pages
391(2012) :4 , p. 1563-1574
ISSN
0378-4371
ISI
000300459700063
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
We develop an agent-based computational model in which the urban informal sector acts as a buffer where rural migrants can earn some income while queuing for higher paying modern-sector jobs. In the model, the informal sector emerges as a result of rural-urban migration decisions of heterogeneous agents subject to social influence in the form of neighboring effects of varying strengths. Besides using a multinomial logit choice model that allows for agent idiosyncrasy, explicit agent heterogeneity is introduced in the form of socio-demographic characteristics preferred by modern-sector employers. We find that different combinations of the strength of social influence and the socio-economic composition of the workforce lead to very different urbanization and urban informal sector shares. In particular, moderate levels of social influence and a large proportion of rural inhabitants with preferred socio-demographic characteristics are conducive to a higher urbanization rate and a larger informal sector. (C) 2011 Elsevier B.V. All rights reserved.
E-info
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