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Question 1: Consider the simple Harris-Todaro Model of Rural-Urban migration. Wage is fixed at 100 rupees in a major city in India. There are 50,000
a. Consider the simple Harris-Todaro Model of Rural-Urban migration. Wage is fixed at 100 rupees in a major city in India. There are 50,000 jobs in the formal sector in this city. Assume that workers are rational decision makers. What is the total urban force at each of the rural wage rates in the table below? Calculate total labor force and informal employment in the urban sector. (Please fill in the chart)
b. Plot the two qq lines using information from the above table.
c. In a separate graph below, show total urban labor force and Informal employment in the Urban sector using the Harris- Todaro graph for the above example if the qq line crosses the rural labor demand curve at 30 rupees when the formal sector employment is 50,000, Show the formal and informal sector in the graph.
- Attachment 1
- Attachment 2
