Economies Of Developing Countries Many Essay

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Harris and Todaro (1970) admit that a limitation of the Todaro model is that assumes potential migrants are risk neutral agents. In fact, they may well prefer a certain expected rural income vs. An uncertain expected urban income. In the real world, risk aversion could make them choose the rural option or to wait for an offer of higher urban income to make the risk of uncertain employment prospects worth their while. But, Harris and Todaro (1970) argue that they could easily adapt their model to reflect risk aversion and would still reach the same conclusions.

In summary, policies aimed at reducing urban unemployment can actually raise urban unemployment rather than reduce it as the Todaro paradox demonstrates. According to Todaro and Smith (2002), there are important conclusions to be drawn from the Todaro model of rural-urban migration including:

Creating urban jobs does not solve the urban unemployment problem because it encourages...

...

"Migration, Unemployment & Development: A Two-Sector Analysis." American Economic Review Mar 1970: 60(1):126-42.
Riadh, Ben Jelili. "Rural-Urban Migration: On the Harris-Todaro Model." http://www.arab-api.org/cv/riyadh-cv/pdf/Riadh3.pdf

Todaro, Michael P. And Smith, Stephen C. Economic Development, 8th edition. Boston: Peason Addison Wesley, 2002.

Sources Used in Documents:

Bibliography

Harris, John, R., and Todaro, Michael, P. "Migration, Unemployment & Development: A Two-Sector Analysis." American Economic Review Mar 1970: 60(1):126-42.

Riadh, Ben Jelili. "Rural-Urban Migration: On the Harris-Todaro Model." http://www.arab-api.org/cv/riyadh-cv/pdf/Riadh3.pdf

Todaro, Michael P. And Smith, Stephen C. Economic Development, 8th edition. Boston: Peason Addison Wesley, 2002.


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