Question

The Harris-Todaro model generates the “Todaro paradox,” which states that:

Q: Answer-The Harris-Todaro model generates the “Todaro paradox,” which states that:

Mechanism If the government creates new urban jobs probability of urban employment rises expected urban wage rises more rural-to-urban migration is induced. If the migration response exceeds new jobs created, net urban unemployment INCREASES. Policy implication urban job creation alone may be counterproductive. Rural development raising rural wagesproductivity is needed to reduce the migration incentive.