One theory to explain the apparently paradoxical relationship of accelerated rural-urban

migration in the context of rising urban unemployment has come to be known as the Todaro
Migration Model and its equilibrium form as the Harris-Todaro Migration Model.

Starting from assumption that migration is an economic phenomenon, which for the individual
migrant can be a quite rational decision despite existence of urban unemployment, the Todaro
Migration Model states that migration proceeds in response to urban-rural differences in
expected income rather than actual earnings. The fundamental premises is that migrants
consider the various labor market opportunities available to them in the rural and urban sectors
and choose the one that maximizes their expected gains from migration.

A schematic framework showing how the varying factors affecting the migration decision interact
is given in Figure 7.11.
In essence, the theory assumes that members of the labor force, both actual and potential,
compare their expected incomes for a given time horizon in the urban sector with prevailing
average rural incomes and migrate if the former exceeds the latter.

Consider the following illustration, suppose that the average unskilled rural worker has a choice
between being a farm laborer for an annual average real income of, say, 50 units or migrating to
the city, where a worker with his skill or educational background can obtain wage employment
yielding an annual real income of 100 units. The more commonly used economic models of
migration, which place exclusive emphasis on income differential factor as the determinant of
the decision to migrate, would indicate a clear choice in this situation. The worker should seek
the higher-paying urban job.
This process of achieving an unemployment equilibrium between urban expected wages and
average rural income rather than an equalized rural-urban wage as in the traditional
neoclassical free-market model can also be explained by a diagrammatic portrayal of the basic
Harris-Todaro model.