problem of economic development

 problem of economic development explained by Harris and todaro 

The Harris-Todaro model is an economic theory that seeks to explain the phenomenon of rural-urban migration in developing countries. It was developed by John R. Harris and Michael P. Todaro in the 1970s and has been widely influential in the field of development economics.

The model begins with the observation that in many developing countries, there is a significant wage differential between rural and urban areas. Urban wages tend to be higher due to factors such as higher productivity, better job opportunities, and access to social amenities. This wage differential creates a strong economic incentive for individuals to migrate from rural areas to cities in search of better employment prospects and higher incomes.

Harris and Todaro argue that the decision to migrate is not solely based on current urban wages but also on individuals' expectations of future urban wages. They propose that individuals in rural areas make migration decisions by comparing the expected urban wage to the rural wage. If the expected urban wage is higher than the rural wage, individuals will choose to migrate; otherwise, they will stay in the rural areas.

The model assumes that urban wages are determined by the demand and supply of labor in the urban sector. The urban labor market is assumed to be perfectly competitive, meaning that wages are determined by the equilibrium between labor demand and labor supply. The urban labor demand is influenced by factors such as capital accumulation, technology, and productivity. On the other hand, the rural wage is determined by agricultural productivity and other rural factors.

The diagram associated with the Harris-Todaro model typically illustrates the equilibrium in the urban labor market and the rural-urban migration decision. In the diagram, the vertical axis represents the wage rate, while the horizontal axis represents the quantity of labor.

The diagram consists of two labor supply curves: the rural labor supply curve and the urban labor supply curve. The rural labor supply curve represents the willingness of individuals in rural areas to supply labor at different wage rates. It is usually assumed to be upward-sloping, indicating that as wages increase, more individuals are willing to migrate from the rural areas to the cities.

The urban labor supply curve represents the willingness of individuals in urban areas to supply labor at different wage rates. It is usually assumed to be perfectly inelastic or vertical since the urban population is assumed to be fixed in the short run.

The labor demand curve in the diagram represents the demand for labor in the urban sector. It is downward-sloping, indicating that as wages increase, the demand for labor decreases.

The intersection of the labor demand curve and the urban labor supply curve determines the equilibrium wage rate in the urban sector. This equilibrium wage rate is typically higher than the rural wage rate due to factors such as higher productivity and better job opportunities in urban areas.

Individuals in rural areas compare the rural wage to their expectations of the urban wage. If their expected urban wage is higher than the rural wage, they choose to migrate, resulting in rural-urban migration. However, if their expected urban wage is lower than the rural wage, they decide to stay in the rural areas.

The Harris-Todaro model emphasizes the role of imperfect information and urban unemployment in shaping migration decisions. In many developing countries, urban unemployment is a significant issue, as job opportunities in the cities may not be sufficient to absorb the influx of rural migrants. This leads to the persistence of urban unemployment and the existence of informal sector employment.

In summary, the Harris-Todaro model explains the phenomenon of rural-urban migration in developing countries by emphasizing the wage differentials between rural and urban areas. The model demonstrates how individuals make migration.