known Harris Todaro model, predicated on the belief that the decision to move involves a gamble where winners secure high paying jobs in the unionized formal sector and losers remain unemployed, is not supported by the data: migrants secure premium jobs rarely but do find work. Williamson finally, an author of the first general equilibrium model of a rural-urban economy, provides an application of this methodology.

Rosenzweig also finds that theories that assume rural labor market failure are not borne out by the facts; although identifying distortions remains important from a policy point of view, the early teachings of development economists were wrong or overemphasized.

Both confirm that even after allowing for the influence of such characteristics as age or education, urban wages exceed rural ones by 30 to 40 percent: migration is GNP increasing. In welfare terms, the gain is smaller or possibly zero, as leaving one's village entails significant psychological transaction costs in terms of sundered friendships and family life, while it costs more to live in a city than in the country.

Migration is an investment decision, accounting for the fact that most migrants are young adults, who have time to amortize the costs of migration. More longitudinal "personal history" data could provide useful information on the connection between migration and family decisions.

# 9.3) The Supply of Human Capital and Its Use

Research on education and health has also been progressing rapidly, and after devoting two chapters to those topics in volume 1, the _Handbook_ editors judged that seven years later, there was room for a chapter on the same topics by Strauss and Thomas in volume 3. Along lines pioneered by Gary Becker, this integrates health and education into an unified examination of human behavior; the paper is also notable for its exemplary application of recent micro econometric methodology.

Both education and health (including the contribution of nutrition) enhance the productivity of workers; and just as migration entails immaterial costs that are not reflected in GNP, education and health are the source of benefits that are not expressible in money terms, as noted forcefully by Sen in the opening chapter of the _Handbook,_ as he emphasizes that they are not even close correlates of material welfare.

This is an appropriate place to recall Nehru's emphasis on the immense reservoir of underused abilities that is available. Some education systems may be more efficient than others in "intermediating" between school and work. China's system of national examination comes to mind in this connection34, which sets a tradition of meritocracy which has influenced all of East Asia; in China, this tradition has for millennia moderated the influence of family and political patronage on official appointments, improved the assignment of able individuals to responsible jobs, and fostered a sense of personal worth among officials, which enhanced the effectiveness of the civil service.

> 34 The selection can be performed either nationally, as in China, or by elite universities such as the universities of Tokyo and Kyoto in Japan, Seoul in Korea, Djakarta in Indonesia (or by both mechanisms).

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