Rural–urban migration,urban unemployment and the structural transformation of a dual economy

This paper restructures the Harris–Todaro model in such a way that rural–urban migration in the presence of urban unemployment brings in the structural transformation desired for a developing dual economy by expanding the industrial sector before any policy is introduced to cure the domestic factor market distortion. Furthermore, migration may also help to eliminate unemployment as well as the wage gap in the economy. When international trade is introduced in this restructured dual economy, trade policies would have new implications; for example, unlike in the original Harris– Todaro structure, the import tariff may bring full employment and eliminate wage gaps between the sectors.