Question

The Harris-Todaro model generates the “Todaro

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.

paradox,” which states that:

A Increasing urban wages to reduce poverty actually increases rural-urban migration and urban unemployment, worsening the urban unemployment problem

B Creating more urban jobs always reduces urban unemployment by absorbing the rural labour surplus

C Rural development policies are always inferior to urban employment guarantee schemes

D The equilibrium migration rate is zero when urban unemployment is sufficiently high

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The Harris-Todaro model generates the “Todaro

Solution