Development, agglomeration, and the organization of work

This paper discusses how the mechanisms that allocate workers to tasks vary systematically with isolation from markets and hence with distance from urban centers. This in turn affects social norms, household structure, and the perceived benefits of migration. The relevance of the framework is illustrated with empirical evidence from personal research, much of which is based on a detailed analysis of Nepal in the 1990s. The evidence shows that away from cities, economic activity reverts largely around the family and the household. Agglomeration makes gains from specialization possible. This leads to self-employment in non-farm activities, but not necessarily to wage employment. The evidence also shows that proximity to markets generates not only higher monetary income but also welfare gains that attract migrants and foster urbanization.