TY  - RPRT
        AU  - Zenou, Yves
        TI  - The Todaro Paradox Revisited
        PY  - 2005/Nov/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1861
        UR  - https://www.iza.org/index.php/publications/dp1861
        AB  - 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.
        KW  - efficiency wages
KW  - search-matching
KW  - rural-urban migration
KW  - policy
        ER  -