Question

Briefly discuss the migration problem in the economic development using the Harris-Todaro Migration Model.

Answer 1

The Harris-Todaro Migration Model provides a framework that can explain the issue of migration between the rural regions of country and the urban regions. The model says an equilibrium is reached when the expected wage in urban regions becomes equal to the marginal product of an agricultural worker. If the expeced wage in urban regions is higher than the marginal productivity of labour in the rural regions, labour migrate from the rural regions to the urban regions. In the unlikely scenario where the expected wage rate in the urban regions is lower than the marginal productivty of labour in the rural region, migration happens from the urban region to the rural region,

In most countries, especially developing ones, a large portion of the country is engaged in agricultural activities. Since there are a lot of people working in this sector, the marginal productivity of labour in agriculture is very low. Therefore, it makes it attractive for people working in agriculture in rural areas to migrate to urban areas. However, beyond a point, as they start migrating, the supply of labour in the urban regions becomes high which causes the urban wage rate to stagnate. This happens when the wage rate in urban areas becomes equal to the marginal productivity of labour in the rural areas.