If the rural wage is 4 and the formal urban wage rate is 10, there will be rural to urban migration if the formal urban unemployment rate is

Question

Quizplus · Accepted Answer

Rural to urban migration occurs when the wage differential between rural and urban areas is significant enough to offset the costs of migration. In this case, if the formal urban wage rate is 10 and the rural wage rate is 4, the wage differential is 6. However, if the formal urban unemployment rate is low (i.e. less than 50%), there will be few available jobs in the urban area, making it less attractive for rural workers to migrate. If the unemployment rate is 50%, then half of the available jobs in the urban area are unfilled, increasing the chances of finding employment for rural migrants, thus making urban migration more attractive. Therefore, the best choice is A)50%.

If the Rural Wage Is 4 and the Formal Urban