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According to the Harris-Todaro model, internal migration restrictions designed to limit the size of the urban informal sectors are inefficient because: C) they result in
According to the Harris-Todaro model, internal migration restrictions designed to limit the size of the urban informal sectors are inefficient because: C) they result in different marginal products of labour across sectors. The Harris-Todaro model suggests that rural-to-urban migration is driven by the wage differential between urban formal employment and rural agricultural employment. If there are restrictions on the size of the urban informal sector, it can lead to a situation where the marginal product of labor (wage) in the formal sector is higher than in the informal sector. This wage differential creates an incentive for rural workers to migrate to urban areas, even if formal sector jobs are limited. As a result, migration restrictions may not effectively control the size of the informal urban workforce and could lead to inefficiencies in the allocation of labor across sectors
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