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
unemployed. In reality, urban informal incomes are higher than in agriculture (Fox and Gaal
2008), but real incomes of the urban informal sector could still be lower, considering the higher
pecuniary and non-pecuniary costs of urban living relative to village life.