This paper examines the welfare effects of trade creation and trade diversion for an immobile capital Harris-Todaro economy. The traditional assumption of a rigid urban wage in the Harris-Todaro model is dropped and a formulation of a wage indexation mechanism makes the urban wage rate endogenous. It is shown that the welfare consequences of trade creation and trade diversion hinge upon the urban wage responses to the formation of various types of customs unions. Additionally, the welfare effects of customs unions are considered for the Lewis labor-surplus economy allowing for urban unemployment. [F15]
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).
Related research
Keywords:
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Batra, Raveendra N & Naqvi, Nadeem, 1987.
"Urban Unemployment and the Gains from Trade,"
Economica,
London School of Economics and Political Science, vol. 54(215), pages 381-95, August.
[Downloadable!] (restricted)