Topic
Harris–Todaro model
About: Harris–Todaro model is a research topic. Over the lifetime, 96 publications have been published within this topic receiving 11943 citations.
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Posted Content•
TL;DR: In this paper, the authors examined why rural-urban labor migration persists and is even increasing in many developing nations despite the existence of positive marginal products in agriculture and significant levels of urban unemployment, and concluded that in the absence of wage flexibility an optimal policy would include both partial wage subsidies or direct government employment and measures to restrict free migration.
Abstract: This study examines why rural-urban labor migration persists and is even increasing in many developing nations despite the existence of positive marginal products in agriculture and significant levels of urban unemployment. Conventional economic models have difficulty reconciling rational behavioral explanations with growing levels of urban unemployment in the absence of absolute labor redundancy in the overall economy. This paper formulates a 2-sector model of rural-urban migration which recognizes the existence of a politically determined minimum urban wage at levels substantially higher than agricultural earnings. The distinguishing feature of the model is that migration proceeds in response to urban-rural differences in expected earnings with the urban employment rate acting as an equilibrating force on such migration. The overall model is used to demonstrate 1) that given the politically determined high minimum wage the continued existence of rural-urban migration in spite of substantial urban unemployment represents an economically rational choice on the part of the individual migrants and 2) that economists standard policy recommendation of generating urban employment opportunities through the use of "shadow prices" implemented by means of wage subsidies or direct government hiring may lead to a worsening of the urban unemployment problem. Welfare implications of alternative policies associated with various programs to retain rural population are assessed under the assumption that the full wage flexibility suggested by economic theory is politically unfeasible; it is concluded that in the absence of wage flexibility an optimal policy would include both partial wage subsidies or direct government employment and measures to restrict free migration. The basic model is a 2-sector internal trade model with unemployment the 2 sectors being the permanent urban sector which specializes in production of manufactured goods and the rural which either uses all available labor to produce agricultural goods or exports part of the labor to the urban sector. It is assumed that the typical migrant retains his ties to the rural sector but the assumption is not necessary for the argument.
6,787 citations
Posted Content•
TL;DR: In this paper, an economic behavioral model of rural urban migration is formulated which represents a realistic modification and extension of the simple wage differential approach commonly found in the literature and this probablistic approach is incorporated into a rigorous model of the determinants of urban labor demand and supply which when given values for the crucial parameters can be used among other things to estimate the equilibrium proportion of the urban labor force that is not absorbed by the modern industrial economy.
Abstract: An economic behavioral model of rural urban migration is formulated which represents a realistic modification and extension of the simple wage differential approach commonly found in the literature and this probablistic approach is incorporated into a rigorous model of the determinants of urban labor demand and supply which when given values for the crucial parameters can be used among other things to estimate the equilibrium proportion of the urban labor force that is not absorbed by the modern industrial economy. Additionally the model will provide a convenient framework for analyzing the implications of alternative policies designed to alleviate unemployment by varying 1 or more of the principal parameters. A more realistic picture of labor migration in less developed nations would be one that views migration as a 2 stage phenomenon: in the 1st stage the unskilled rural worker migrates to an urban area and spends a certain period of time in the "urban traditional" sector; and the 2nd stage is reached with the eventual attainment of a more permanent modern sector job. This 2 stage process allows one to ask some basic questions concerning the decision to migrate the proportionate size of the urban traditional sector and the implications of accelerated industrial growth and/or alternative rural urban real income differentials on labor participation in the modern economy. In the model the decision to migrate from rural to urban areas is functionally related to 2 principal variables: the urban rural real income differential and the probability of obtaining an urban job. To understand better the nature of the supply function to be used in the overall model of the determinants of urban unemployment it is helpful to state the underlying behavioral assumptions of the model of rural urban migration: it is assumed that the percentage change in the urban labor force as a result of migration during any period is governed by the differential between the discounted streams of expected urban and rural real income expressed as percentage of the discounted stream of expected rural real income; the planning horizon for each worker is identical; the fixed costs of migration are identical for all workers; and the discount factor is constant over the planning horizon and identical for all potential migrants. The model demonstrates the overall net impact of allowing these parameters to vary over time and/or choosing alternative values. It underlines in a simple and plausible way the interdependent effects of industrial expansion productivity growth and the differential expected real earnings capacity of urban versus rural activities on the size and rate of increase in labor migration and therefore ultimately on the occupational distribution of the urban labor force. Possibly the most significant policy implication that emerged from the model is the great difficulty of substantially reducing the size of the urban traditional sector without a concentrated effort at making rural life more attractive.
3,341 citations
TL;DR: The analysis is extended to consider several important factors which have previously been neglected--a more generalized approach to the job search process, the possibility of underemployment in the so-called urban "murky sector," preferential treatment by employers of the better educated, and consideration of labor turnover--and demonstrate that the resulting framework gives predictions closer to actual experience.
851 citations
TL;DR: In this article, the authors consider the problem of urban unemployment and underemployment in the urban and rural sectors, and propose to use a shadow price of labor for projects in the government sector, which is lower than the market wage in urban sector.
Abstract: The problem of unemployment and underemployment in LDC's has long been a central concern of development economics More recently, the discussion has focused on unemployment and underemployment in the urban sector The common diagnosis of the source of urban unemployment, particularly in economies such as those in East Africa where there does not seem to be "surplus labor" in the agricultural sector, is that there is a large wage differential between the urban and rural sectors that encourages migration into the urban sector And, finally, there seems to be a consensus that the remedies for this -if it is impossible in fact to lower the urban wage to the level in the rural sector -are (a) a wage subsidy to encourage private employers to hire more laborers (use more laborintensive techniques) and (b) the use of a shadow price of labor for projects in the government sector, which is lower than the market wage in the urban sector Although economists have advised governments all over the world to undertake these measures, they have based these policy prescriptions on partial equilibrium models that have not traced out the full implications of these policies; in particular, they have failed to take into account (a) the determination of the rate or level of unemployment in the economy and (b) the determination of wages in the urban sector The possible implications of these failures may easily be seen If the number of people in the urban sector is fixed,
663 citations
444 citations
Related Topics (5)
Performance Metrics
| Year | Papers |
|---|---|
| 2021 | 3 |
| 2018 | 2 |
| 2017 | 3 |
| 2016 | 2 |
| 2015 | 2 |
| 2014 | 1 |