Optimal Policies in a Dual Economy with Open Unemployment and Surplus Labour
AbstractThis paper considers a dual economy in which the urban sector has open unemployment while the rural sector has surplus labor. The model is a n extension of the Harris-Todaro (1970) framework as developed by Kul B. Bhatia (1979), where full employment is said to exist when open u nemployment and surplus labor are eliminated. The authors characteriz e this full employment equilibrium and the conditions for technical e fficiency and, in addition, show the existence of a unique pair of op timal wage subsidies to each sector. Unlike the earlier uniform wage subsidies, they show that an optimal subsidy is not uniform across se ctors. Copyright 1987 by Royal Economic Society.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 39 (1987)
Issue (Month): 2 (June)
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- Khandker, A. Wahhab & Rashid, Salim, 1995. "Wage subsidy and full-employment in a dual economy with open unemployment and surplus labor," Journal of Development Economics, Elsevier, vol. 48(1), pages 205-223, October.
- Ilhom Abdulloev & Ira N. Gang & John Landon-Lane, 2011.
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CReAM Discussion Paper Series
1124, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- Abdulloev, Ilhom & Gang, Ira N. & Landon-Lane, John, 2011. "Migration as a Substitute for Informal Activities: Evidence from Tajikistan," IZA Discussion Papers 6236, Institute for the Study of Labor (IZA).
- Ilhom Abdulloev & Ira N. Gang & John Landon-Lane, 2011. "Migration as a Substitute for Informal Activities: Evidence from Tajikistan," Working Papers 311, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
- S.M. Turab Hussain, 2005. "Migration, Policy and Welfare in the Context of Developing Economies : A Simple Extended Family Approach," Development Economics Working Papers 22256, East Asian Bureau of Economic Research.
- Ira N. Gang & Myeong-Su Yun, 2006. "Immigration Amnesty and Immigrant's Earnings," Departmental Working Papers 200632, Rutgers University, Department of Economics.
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