Todaro model

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In development economics, a model of rural–urban migration in the presence of high urban unemployment. The decision to migrate is economically rational for an individual migrant, if modern urban sector wages are sufficiently high relative to earnings in agriculture, even when the probability of finding a job is low. The Todaro model has strong policy implications regarding development strategies. In particular, efforts to reduce urban unemployment by stimulating job creation in the urban modern sector are likely to induce a greater flow of rural migrants, resulting in even higher urban unemployment, and therefore rural development should be encouraged instead.

Subjects: Economics.

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