Show that despite a large unemployment migration continue

Reference no: EM13183541

In the Todaro model of migration, suppose there are 1 million people living in a city of which 400,000 are unemployed. Let wu (urban modern sector wage) = 8 wr (rural sector wage) = 2. Show that despite such a large unemployment migration continues and find the equilibrium rate of urban unemployment and the equilibrium number of unemployed at which migration would stop. Show your steps. B. After the equilibrium is reached, suppose 100,000 new jobs are created, causing 200,000 new migrants to enter the city. Does the equilibrium rate change? What is the new rate of urban unemployment right after the new migrants have arrived, but before it reaches the equilibrium rate.

Reference no: EM13183541

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