LEC 4 ECON 314 01/16/2014
The HarrisTodaro Model
Two sectors – rural and urban
The wages in the urban sector if fixed at a level higher than the equilibrium wage rate.
There is an initial assumption of perfect flexibility of wages and prices and fullemployment in both the
Apparently this rule gets broken.
Migration depends on expected rather than actual wage differentials.
Wages in the Urban formal sector may be kept artificially high