Rural-urban migration and endogenous ethic: the cultural role of agriculture in economic development

This paper argues that, in a developing economy, progress in agriculture may stimulate growth of the urban sector through important non-market-mediated e¤ects. Higher living standards enable traditional agricultural societies to solve their social dilemmas, which implies a stream of civic-minded rural-urban migrants that improves the social-capital base for non-farm growth. Unfavourable conditions in agriculture, however, can lead to a cultural poverty trap that hampers the structural transformation of a traditional economy. We examine this argument using a Harris- Todaro type of economy with e¢ ciency wage setting in the urban sector.