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In a dual economy with a rural and an urban sector, workers migrate from the rural to the urban sector based on expected incomes. Workers
In a dual economy with a rural and an urban sector, workers migrate from the rural to the urban sector based on expected incomes. Workers are assured of a rural job. In the urban sector, the migrant may or may not get a job. W(u)[L(u)(L - L(r))] = W(r), where W(u) > W(r) L(u) and L(r) are urban and rural labourers and L is the total labour force. W(u) and W(r) are the urban and rural wage rates which stand at $60 and $40 respectively. If urban employment increases by one unit, urban unemployment a. decreases by 0.5 units b. increases by 0.5 units c. decreases by 0.33 units d. increases by 0.33 units
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