Document Type



In this paper we question the pioneering work of Todaro, which states that rural-to-urban labor migration in less developed countries (LDCs) is an individual response to a higher urban expected income. We demonstrate that rural-to-urban labor migration is perfectly rational even if urban expected income is lower than rural income. We achieve this under a set of fairly stringent conditions: an individual decision-making entity, a one-period planning horizon, and global risk aversion. We obtain the result that a small chance of reaping a high reward is sufficient to trigger rural-to-urban labor migration.

Publication Date


Original Citation

Katz, Eliakim and Oded Stark. "Labor Migration and Risk Aversion in Less Developed Countries," Journal of Labor Economics, Vol. 4, No. 1 (1986), pg. 134-149.


Department of Economics

Legacy Department

Department of Economics




University of Chicago Press



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