Fields (1975, 1990) presented a further important extension of the HT model, distinguishing
unemployment and informal employment. The economy’s labourforce is now composed of four
groups: workers in the urban modern sector; workers in the urban informal sector; the urban
unemployed; and subsistence agriculture. In Fields’ model, taking a low-paying urban informal
job facilitates searching for a modern-sector job relative to remaining in the countryside,
although unemployed workers face even-lower search costs. Fields’ (1975) framework implies
that urban informal earnings are below rural incomes, although superior to incomes of the