Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33296
Authors: 
Zenou, Yves
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers 1861
Abstract: 
The Todaro Paradox states that policies aimed at reducing urban unemployment are bound to backfire: they will raise rather than reduce urban unemployment. The aim of this paper is to reexamine this paradox in the context of efficiency wage and search-matching models. For that, we study a policy that consists in decreasing the urban unemployment benefit. In an efficiency wage model, we find that there is no Todaro paradox while this is not always true in a search-matching model since a decrease in the urban unemployment benefit can increase both urban employment and unemployment.
Subjects: 
efficiency wages
search-matching
rural-urban migration
policy
JEL: 
D83
J41
J64
O15
Document Type: 
Working Paper

Files in This Item:
File
Size
282.54 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.