Harris–Todaro Migration Model Approach To Analyze The Effect Of Rural Gini Ratio, Urban Minimum Wage, And Rural Unemployment Rate On The Level Of Urbanization In Indonesia (2017–2023)

Laila Mukaromah; Asih Murwiati

doi:10.63922/ijebir.v4i03.1804

Laila Mukaromah Faculty of Economics and Business, Universitas Lampung, Bandar Lampung, Indonesia
Asih Murwiati Faculty of Economics and Business, Universitas Lampung, Bandar Lampung, Indonesia

DOI: https://doi.org/10.63922/ijebir.v4i03.1804

Keywords: Urbanization, Harris–Todaro, Gini Index, Minimum Wage, Rural Unemployment, GMM.

Abstract

This study analyzes the effects of rural income inequality, urban minimum wage, and rural unemployment on urbanization in Indonesia from 2017 to 2023 using the Harris–Todaro Migration Model and the Generalized Method of Moments (GMM). The findings reveal that past urbanization significantly and positively affects current urbanization, indicating cumulative patterns. The rural Gini ratio shows a significant negative effect, suggesting that high inequality hinders migration due to limited economic mobility. Urban minimum wage also has a significant negative effect, as higher wages may reduce employment opportunities and decrease urban attractiveness. Likewise, rural unemployment negatively affects urbanization, reflecting financial and risk-related barriers to migration. These results highlight the need for equitable rural development and inclusive labor and migration policies.

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