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
A)50%
B)60%
C)70%
D)all of the above

Question

Quizplus · Accepted Answer

Migration will occur if the expected urban wage (urban wage * probability of employment) is greater than the rural wage. At a 50% unemployment rate, the probability of employment is 50%, making the expected urban wage 5, which is greater than the rural wage of 4.

If the Rural Wage Is 4 and the Formal Urban