Question

In the context of the Harris-Todaro model of rural-urban migration, which one of the following is TRUE ?

• A. Unemployment in the urban sector emerges because rural-urban migration occurs primarily due to the higher expected wage income in the urban sector
• B. Unemployment in the urban sector emerges because rural workers migrate to the cities and towns due to the expected shortage of unskilled labour in the urban sector
• C. Unemployment in the urban sector emerges because the rural wage rate is institutionally fixed by the local body at a higher level than the urban wage rate
• D. Unemployment in the rural sector emerges because urban workers migrate to the rural sector due to the higher expected wage income in the advanced economies

Answer 1

The Correct Option is A

The Harris-Todaro model of rural-urban migration is a key concept in development economics, explaining migration patterns between rural and urban areas. According to this model, migration occurs because potential migrants consider the expected wage differences between the two areas. Hence, people move if they expect to earn more in urban areas, despite the risk of unemployment.

1. Rural-urban migration is driven by the higher expected urban wage compared to rural areas. The notion of expected wage considers both the wage level and the probability of securing employment in urban sectors.
2. The model suggests urban unemployment arises not from an immediate lack of jobs but from an imbalance between employment opportunities and the continuous influx of labor seeking higher wages.
3. The correct understanding is that urban unemployment results from migration motivated by expected higher wages, even if actual unemployment is initially high. Migrants evaluate their potential earnings based on probabilities, not certainties.
4. Option comparison: The other statements incorrectly characterize the source of unemployment or migration triggers. For instance, a rural wage fixed higher than an urban wage would deter migration (option iii), and a rural-sector unemployment context misaligns with the generalized model structure (option iv).

Correct Answer: Unemployment in the urban sector emerges because rural-urban migration occurs primarily due to the higher expected wage income in the urban sector.