IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v26y1993i4p901-18.html

Economic Development, Urban Underemployment, and Income Inequality

Author

Listed:
  • James E. Rauch

Abstract

The evolution of income inequality during the course of economic development is investigated. The source of inequality is market luck in obtaining employment in the protected urban 'formal sector'versus employment in the unprotected urban 'informal sector.' It is shown that with development, inequality tends to follow an 'inverted U.'It rises when urbanization is low and consequent pressure on the land keeps rural incomes low, making agents willing to incur high risks of 'underemployment'in the urban informal sector. It eventually falls after urbanization and consequently rural incomes have increased sufficiently to allow agents to make better than even bets in the urban-industrial sector.

Suggested Citation

  • James E. Rauch, 1993. "Economic Development, Urban Underemployment, and Income Inequality," Canadian Journal of Economics, Canadian Economics Association, vol. 26(4), pages 901-918, November.
    • Handle: RePEc:cje:issued:v:26:y:1993:i:4:p:901-18
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0008-4085%28199311%2926%3A4%3C901%3AEDUUAI%3E2.0.CO%3B2-L
    Download Restriction: only available to JSTOR subscribers
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:26:y:1993:i:4:p:901-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Werner Antweiler (email available below). General contact details of provider: https://edirc.repec.org/data/ceaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.