Q3: Harris Todaro model: There is an urban sector with a minimum wage and a rural sector with a lower competitive wage. There is no unemployment in the competitive rural sector. The wage equals the value of marginal product of labour in each sector. Rural workers migrate to the city to search for scarce high wage urban jobs until the expected urban wage equals the rural wage. Wu is the urban wage and Wr the rural wage. When rural workers reach the city there is a probability p that they will be employed and a probability (1-p) that they will be unemployed (searching for a job). What is the expected urban wage if unemployed urban workers get a wage of zero? If a new urban sector job is created what can you say about the change in (a) urban output, (b) the number of urban unemployed, (c) rural output and (d) total output. Q3: Harris Todaro model: There is an urban sector with a minimum wage and a rural sector with a lower competitive wage. There is no unemployment in the competitive rural sector. The wage equals the value of marginal product of labour in each sector. Rural workers migrate to the city to search for scarce high wage urban jobs until the expected urban wage equals the rural wage. Wu is the urban wage and Wr the rural wage. When rural workers reach the city there is a probability p that they will be employed and a probability (1-p) that they will be unemployed (searching for a job). What is the expected urban wage if unemployed urban workers get a wage of zero? If a new urban sector job is created what can you say about the change in (a) urban output, (b) the number of urban unemployed, (c) rural output and (d) total output