Suppose the rural wage is $1 per day. Urban modern sector employment can be obtained with 5 probability and pays $2 per day

Will there be any rural-urban migration? Explain your reasoning, stating explicitly any simplifying assumptions, and show all work.


In this case the expected urban wage is equal to the rural wage. Only an individual who is risk loving will migrate.

Economics

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If the desired reserve ratio is 15 percent, then for every dollar that is deposited in the bank, the bank will

A) keep 15 cents as reserves. B) keep 85 cents as reserves. C) keep 85 cents as reserves and loan 85 cents. D) loan 15 cents. E) keep 15 cents as reserves and loan 15 cents.

Economics

Why is it that people who have to fly at a moment's notice often pay some of the highest air fares whereas people who wait until the last minute to buy a ticket to a live performance of play may be able to get a better price than someone who bought

their ticket months in advance.

Economics

According to the Gordon-Growth model, if the stock price is $21, required return on equity is 10% and the current dividend is $1, what is the expected growth rate of dividends?

A) 2% B) 5% C) 10% D) 15%

Economics

According to the law of diminishing marginal returns, as more of a variable input is combined with fixed amounts of other resources:

a. the additions to output will eventually decrease. b. the additions to output cannot increase. c. total output will eventually decrease. d. the additions to output will eventually turn negative.

Economics