| This study is an attempt to resolve, within the context of the developing dual economy, the twin anamolies of escalating urban wages and uninterrupted migration into industrial centres from their peripheries, both unresponsive to burgeoning urban unemployment.;There are two major extensions of the model: (i) training enhances the efficiency of the worker at an initially increasing but eventually decreasing rate. The efficiency response is identical across workers of the same vintage but varies across vintages. The non-convexity provides an additional reason for the downward inflexibility of wages. (ii) Imperfections in the information available to firms and to potential migrants may well reinforce one another and result in the development of signalling equilibra, length-of-stay being the signal for trainability, an unobservable trait of employees.;Two corollaries of the major theorems are (i) The incidence of urban unemployment will fall on the migrants; this is a direct result of the enhanced relative trainability of veterans; (ii) Inframarginal workers will migrate first because the less able have higher migration costs and exaggerated misperceptions.;The proposed model specifies a labour supply that consists of recent migrants and veteran urbanites; migrants are initially less trainable but eventually get transformed into veterans. The firm's attempt to secure future veteran supplies results in the downward inflexibility of urban wages. Excess migrant supply is a response to incipient excess demand for veterans. Migration occurs in response to rural-urban differentials in expected wages; the low probability of urban employment is sufficiently offset by high urban wages to maintain migration. The model demonstrates the existence of a steady-state equilibrium with urban unemployment, high urban wages and continuous migration. |
