The State and urban concentration

Abstract

Rural-urban migration, especially into metropolitan areas, is usuallyally explained as resulting from expulsion from the rural areas or by urban attraction. This article highlights the role of the state as a creator of a fiscal residuum for the low income migrants in the metropolitan areas, due to higher benefits from public services than the tax charges. This creates a real income differential between a metropolitan area and its surrounding region, leading to a speed of concentrating urbanization that is incompatible with the absorptive capacity of the metropolitan urban market. The state is endogenous in this process, as a consequence of electoral competition. This process is further strenghtened in federative systems such as the Brazilian,in which three government levels concentrate their political interestsin the metropolitan areas.