The social cost of labor and project evaluation: A general approach
This paper develops a general methodology for analyzing shadow wage (and other shadow prices). Our approach is to identify those reduced form relationships describing the economy which are central to the determination of the shadow wage, and use these to obtain simple formulae for the shadow wage. Among the aspects of the economy on which we focus are: (i) the difference between the domestic and international prices, (ii) the equilibrating mechanisms in the economy, (iii) the mechanisms which determine earnings of industrial and agricultural workers, (iv) the nature of migration, and (vi) the intertemporal trade-offs and the attitudes towards inequality. These aspects are modelled in a general manner, which can be specialized to a number of alternative hypotheses concerning technology, behavioral postulates, and institutional settings. Most earlier results on the shadow wages are derived as special cases of our formulae. In addition, we identify a number of new qualitative results concerning the relationship between the shadow wage and the market wage.
(This abstract was borrowed from another version of this item.)
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.:
- N. H. Stern, 1972. "Optimum Development in a Dual Economy," Review of Economic Studies, Oxford University Press, vol. 39(2), pages 171-184.
- repec:oup:restud:v:42:y:1975:i:4:p:503-23 is not listed on IDEAS
- Newbery, David M G, 1972. "Public Policy in the Dual Economy," Economic Journal, Royal Economic Society, vol. 82(326), pages 567-90, June.
- Roberts, Kevin W S, 1982. "Desirable Fiscal Policies under Keynesian Unemployment," Oxford Economic Papers, Oxford University Press, vol. 34(1), pages 1-22, March.
- Dixit, Avinash & Stern, Nicholas, 1974. "Determinants of Shadow Prices in Open Dual Economies," Oxford Economic Papers, Oxford University Press, vol. 26(1), pages 42-53, March.
- Marchand, Maurice & Mintz, Jack & Pestieau, Pierre, 1985. "Public production and shadow pricing in a model of disequilibrium in labour and capital markets," Journal of Economic Theory, Elsevier, vol. 36(2), pages 237-256, August.
- Dixit, Avinash, 1971. "Short-run Equilibrium and Shadow Prices in the Dual Economy," Oxford Economic Papers, Oxford University Press, vol. 23(3), pages 384-400, November.
- Newbery, David, 1974. "The Robustness of Equilibrium Analysis in the Dual Economy," Oxford Economic Papers, Oxford University Press, vol. 26(1), pages 32-41, March.
- A. K. Dixit, 1968. "Optimal Development in the Labour-Surplus Economy," Review of Economic Studies, Oxford University Press, vol. 35(1), pages 23-34.
- repec:oup:restud:v:39:y:1972:i:2:p:171-84 is not listed on IDEAS
- Sen, Amartya K, 1972. "Control Areas and Accounting Prices: An Approach to Economic Evaluation," Economic Journal, Royal Economic Society, vol. 82(325), pages 486-501, Supplemen.
- Blitzer, Charles & Dasgupta, Partha & Stiglitz, Joseph, 1981. "Project Appraisal and Foreign Exchange Constraints," Economic Journal, Royal Economic Society, vol. 91(361), pages 58-74, March.
- Heady, Christopher John, 1981. "Shadow Wages and Induced Migration," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 108-21, March.
- Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:28:y:1985:i:2:p:135-163. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.