This question uses the framework of the Harris-Todaro model of rural-urban migration.Consider Syldavia, a small (fictional) developing country. Workers in the country can either work in the rural agricultural sector, earningwith certainty, or move to the urban area. If they move to the urban area, with probabilitythey find work in the urban formal sector and earn(the minimum wage), but with probability1 they do not find work in the formal sector and wind up unemployed, earning= 0. Let us assume 1) that the probability of finding a job in the formal urban sector is equal to the employment rate (i.e. = (+ ), whererepresents the number employed in the formal urban sector andrepresents the number unemployed in the urban sector), and 2) that unemployed workers in the urban sector cannot immediately migrate back to the rural sector.

a)Consider an individual living in the rural area and earning. What is theexpected value of this individual's earnings (in terms ofp) if they were to move to the urban sector? [2 marks]

b)Write down the equilibrium condition in which no further migration occurs.In one sentence, explain what it means. [5 mark]

(Please include the working out as well).