TheTodaromodelHypotheses1-Migrationisanindividual.pptVIP

The Todaro model Hypotheses: 1-Migration is an individual rational decision 2-Migration proceeds in response to urban-rural differences in expected income rather than actual earnings 3. Compare of expected incomes for a given time horizon in the urban sector (returns minus costs of migration) with prevailing average rural incomes in a context of a urban job lottery The Harris -Todaro Model If wages were perfectly flexible, equal wages would be paid in industry and agriculture and there would be no involuntary unemployment * In a perfectly competitive labor market * For a variety of reasons how