Most urban growth this century will occur in developing economies. Whether this urbanisation translates into sustained economic development depends on how quickly workers gain access to productive formal employment. I develop a dynamic spatial general equilibrium model with three types of labour markets: rural, urban informal, and urban formal.
- Speaker
- Date
- Monday 16 Nov 2026, 11:30 - 12:30
- Type
- Seminar
- Room
- 3.02
- Building
- Langeveld Building
Migrants enter an informal queue, and formalisation depends on informal labour congestion and the economy’s capacity to move informal workers into formal employment.
I quantify the model for Ethiopia using novel geospatial and microdata. Formalization speed emerges as a key determinant of long-run structural transformation, growth, and welfare. At current capacity, workers wait about 26 years for a formal job and informality persists.
Reducing formalisation frictions to match rates observed in successfully transforming economies cuts the wait to about 17 years. This raises the urban formal employment share by 26 percentage points and real GDP by 13.1 percent by 2065.
Formalisation speed shapes the effectiveness of economic policies and national resilience to climate shocks and conflict. Cities become engines of structural transformation not when workers arrive, but when labour markets absorb them into productive employment.
Registration
To participate, please send an email to: ae-secr@ese.eur.nl
