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LEC 4 ECON 314.docx

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Department
Economics (Arts)
Course
ECON 314
Professor
Eesha Sen Choudhury
Semester
Winter

Description
LEC 4 ECON 314 01/16/2014 The Harris­Todaro Model Assumptions 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  sectors. 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
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