%0 Report
        %A Zenou, Yves
        %T The Todaro Paradox Revisited
        %D 2005
        %8 2005 Nov
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 1861
        %U https://www.iza.org/index.php/publications/dp1861
        %X The Todaro Paradox states that policies aimed at reducing urban unemployment are bound to backfire: they will raise rather than reduce urban unemployment. The aim of this paper is to reexamine this paradox in the context of efficiency wage and search-matching models. For that, we study a policy that consists in decreasing the urban unemployment benefit. In an efficiency wage model, we find that there is no Todaro paradox while this is not always true in a search-matching model since a decrease in the urban unemployment benefit can increase
both urban employment and unemployment.
        %K efficiency wages
%K search-matching
%K rural-urban migration
%K policy