Harris and Todaro Model Flashcards
1
Q
why may wages be higher?
A
- sector may be unionised
- showcase of government policy
- minimum wage, pensions, day care to raise worker utility
- can hire workers of best quality and fire inferior workers
2
Q
what happens in formal urban sector?
A
pays higher wage to workers but this creates unemployment
3
Q
what happens in informal urban sector and rural sector?
A
- low wage fluctuate according to supply and demand
- no unionisation
- government policy hard to implement
- if labour is family there is no incentive to pay high wages
4
Q
migration is response to…
A
significant gap between rural and urban
5
Q
decisions of potential migrants
A
- choose between relatively safe option to stay in agri or take gamble and move to urban where high paying job may be available
- frustrated job seekers enter informal sector
- easy to find but low pay
6
Q
equilibrium concept implies…
A
particular allocation of labour between three sectors of economy
