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Minimum Wage And Income Distribution In The Harris-Todaro Model

Author

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  • Vassilis T. Rapanos

    () (University of Athens)

Abstract

The purpose of this paper is to examine the effects of a change in the minimum wage on income distribution and employment in a developing economy. The basic framework of our analysis is the original Harris-Todaro model, in which the only factor that is intersectorally mobile is labor. We analyze the effects of a change in the minimum wage on income distribution, sectoral employment and unemployment, both in the framework of a small open economy, and with endogenous commodity-price changes. Our findings differ from the results of the existing literature and shed light on the complex interaction between the urban and the rural sector of a developing economy.

Suggested Citation

  • Vassilis T. Rapanos, 2005. "Minimum Wage And Income Distribution In The Harris-Todaro Model," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 1-14, June.
  • Handle: RePEc:jed:journl:v:30:y:2005:i:1:p:1-14
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    File URL: http://www.jed.or.kr/full-text/30-1/01_J693.PDF
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    References listed on IDEAS

    as
    1. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    2. Kul Bhatia, 2001. "Specific and mobile capital, migration and unemployment in a Harris-Todaro model," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 11(2), pages 207-222.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Minimum Wage; Economies of Scale; Urban Unemployment;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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