The Todaro Paradox: An Econometric Test Using Data from Congo

Abstract

In this paper we test on data from Congo, what is come to know as Todaro Paradox. That is, on the one hand, the idea is put forward by Lewis that, industrial expansion will allow developing countries to reduce unemployment caused by an oversized rural workforce. However, on the other hand, Harris and Todaro argue that expanding urban employment will attract the rural population into the cities thus increasing unemployment. Our result seems to confirm Lewis’ theory that urban job creation leads to lower unemployment.