harris-todaro migration model and it's applicability in bangladesh

Welcome To Our Presentation

Harris-Todaro Migration Model and it’s Applicability in Bangladesh

Presented ToNishad Nasrin Assistant Professor Economics DisciplineKhulna University Khulna.

Prepared By… Ehsun Newaz (141501) Mohaiminul Islam (141509)

Background of Harris-Todaro Migration Model

1960s: Rural-to-urban migration despite high levels of urban unemployment Failure of Explanation: General equilibrium model: Lewis Model 1970:John R.Harris and Michael P. Todaro published their famous paper

on rural-to-urban migration; Unemployment and Development: A Two-Sector Analysis

Harris-Todaro model try to answer the question “WHY RURAL-URBAN MIGRATION STILL TAKING PLACE DESPITE HIGH UNEMPLOYMENT IN URBAN AREAS?”

Mohaiminul Islam

Structural transformationThe process of transformingan economy in such a waythat the contribution to nationalincome by the manufacturingsector eventuallysurpasses the contribution bythe agricultural sector. Moregenerally, a major alteration inthe industrial composition ofany economy.Lewis two-sector model Atheory of development inwhich surplus labor from thetraditional agricultural sectoris transferred to the modernindustrial sector, the growthof which absorbs the surpluslabor, promotes industrialization,and stimulates sustaineddevelopment.Surplus labor The excesssupply of labor over andabove the quantity demandedat the going free-market wagerate. In the Lewis two-sectormodel of economic development,surplus labor refers tothe portion of the rural laborforce whose marginal productivityis zero or negative.

Introduction of The Theory

Migration; An economic Decision: migrate on the basis of wages and probability of unemployment

Migrants calculate (present value of) urban expected income (or its equivalent) and move if it exceeds average rural income.

Predicts that expected incomes will be equated across rural and urban sectors when taking into account informal sector activities .

User

Harris-Todaro migration model explains rural-urban migration as an economically rational process although there is high urban unemployment. Migrants calculate (present value of) urban expected income (or its equivalent) and move if it exceeds average rural income. Whereas Harris-Todaro model is an equilibrium version of the Todaro migration model that predicts that expected incomes will be equated across rural and urban sectors when taking into account informal sector activities and outright unemployment.

The Intuition Behind the Model

The urban minimum wage is set to be higher than the wage rate paid to rural labour

This results in a wage differential between the two sectors. Rural workers have an incentive to migrate to the urban areas

despite of urban unemployment, because of the potential of higher earnings in the urban sector.

Such migration will continue as long as there is a possibility for migrants to increase their income by moving to a city.

The Intuition Behind the Model

Some migrants will have arranged employment before leaving the countryside.

Others will begin searching for employment only once they have arrived at their destination.

Some will necessarily join the pool of urban unemployed Even in that case, the presence of them in the city may increase his

chance of finding urban employment there at a later date. This explains why there is a continuous flow of migrants observed in

developing countries despite of the high urban unemployment rates. Continued…

Applicability Towards Bangladesh

Some key points: Urban wage rate is Held higher Wage Differential: manufacturing sector and agricultural sector Incentive : Higher earning potential Overall: they mainly considered pull factors

Applicability Towards Bangladesh…

What we see in Bangladesh: Urban wage rate is higher Wage differential exists Higher earning potential: A good reason

…Applicability Towards Bangladesh

BUT !!!1. Push factors are also responsible; Natural calamities(3.5%,2011)(River erosion ,Flood , Storm); political harassment2. Marriage(38.7%)3. Education (4.9%)

Trend of Migration in Bangladesh

Source: BBS survey on Population Distribution and Internal Migration in Bangladesh, November 2015

From the above source we get that…

1. In 2004, a maximum, 38.5%, of internal migration took place due to employment and business activities, while in 2011 the maximum 38.7% of internal migration took place due to marriage. 2 .In the same year, the share of push factors like natural calamity, family quarrel and tortured or deserted by spouse is respectively 2.1%, 1.2% and 0.2%.3. Additionally a maximum, 63.6%, migration occurred in Khulna division for this reason (marriage). Continued…

Conclusion

There is a large portion of migrants do follow Harris-Todaro model who search for better job in terms of greater income,

It is not 100% concrete for making migration decision in Bangladesh. Thus, although it can be concluded from the above evidence that the

Harris- Todaro model is likely to be applicable to most developing countries including Bangladesh but it do not explain the migration and unemployment problem completely.

Thank You for Your Patience

Query

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