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http://hdl.handle.net/10419/33296
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| Title: | | The Todaro paradox revisited  |
| Authors: | | Zenou, Yves |
| Issue Date: | | 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 |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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