Zenou, Yves - Institutet för Näringslivsforskning (IFN) - 2005
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 …