Harris Todaro Model

Explain Harris Todaro Model The Harris-Todaro Model is an economic model utilise in development economics and welfare economics to let off well-nigh of the issues concerning coarse-urban migration. The main result of the model is that the migration decision is establish on expect income differentials between outlandish and urban areas, not operate differentials. This implies that rural-urban migration in a context of high urban unemployment eject be economically rational if expect urban income exceeds pass judgment rural income. Overview Essentially, the model asserts that an equilibrium bequeath be reached when the expected wage in urban areas, familiarized for the unemployment rate, is equal to the fringy product of an agricultural figureer. The model assumes that unemployment is non-existent in the rural agricultural empyrean. Also, it is assumed that rural agricultural outturn and the subsequent grind market is perfectly competitive. As a result, the agricult ural rural wage is equal to agricultural marginal productivity. In equilibrium, the rural to urban migration rate will be zero since the expected rural income equals the expected urban income. Assumptions * dual parsimoniousness thriftiness said to be dual parsimony. at that place exists two sectors, urban Sector/Modern Sector and cracker-barrel Sector * Rural Economy is an agricultural sector and the urban Economy is depended on industrial sector * Rural trifle force consists of un acquisitioned working class whereas urban work force consists of skilled labour. In other(a) words, anyone can catch up with employment in rural sector but wad in the urban sector request to possess skill to get employment. * Unemployment persists only in modern-day sector. There is no unemployment in rural sector. * positive itemize of labour is fixed. * gold wage is also fixed Notations L = Total issuance of labour/Total labour force in the economy LM = Total reckon of labour busy in modern s! ector LR = Total number of labour employed in rural sector U = Unemployment/Total number of...If you want to get a full essay, order it on our website: OrderEssay.net

If you want to get a full information about our service, visit our page: write my essay