Customs Union and the Harris-Todaro Model with International Capital Mobility
Traditional customs union theory concludes that trade creation enhances welfare. Thus, Yu's (1982) conclusion that trade creation may decrease welfare in the presence of general unemployment is an important observation. Parai and Batra (1987) reestablish the traditional results in the Harris-Todaro model, where unemployment is sector-specific. We conclude that trade creation may decrease welfare in the Harris-Todaro model with international capital mobility when labor subsidies or capital taxes (subsidies) exist. Moreover, second-best labor subsidies or capital subsidies (taxes) recommended by some authors increase the chances of welfare decreasing trade creation. Copyright Kluwer Academic Publishers 1992
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.:
- Parai, Amar K. & Batra, Raveendra N., 1987. "Customs union and unemployment in LDCs," Journal of Development Economics, Elsevier, vol. 26(2), pages 311-319, August.
- Corden, W M & Findlay, Ronald, 1975. "Urban Unemployment, Intersectoral Capital Mobility and Development Policy," Economica, London School of Economics and Political Science, vol. 42(165), pages 59-78, February.
- Miyagiwa, Kaz, 1988. "Corporate income tax incidence in the presence of sector-specific unemployment," Journal of Public Economics, Elsevier, vol. 37(1), pages 103-112, October.
- Das, Satya P., 1981. "Effects of foreign investment in the presence of unemployment," Journal of International Economics, Elsevier, vol. 11(2), pages 249-257, May.
- J. Bhagwati & T. N. Srinivasan, 1973.
"Alternative Policy Rankings in a Large, Open Economy with Sector-Specific, Minimum Wages,"
109, Massachusetts Institute of Technology (MIT), Department of Economics.
- Srinivasan, T. N. & Bhagwati, Jagdish, 1975. "Alternative policy rankings in a large, open economy with sector-specific, minimum wages," Journal of Economic Theory, Elsevier, vol. 11(3), pages 356-371, December.
- Yu, Eden S H, 1982. "Unemployment and the Theory of Customs Unions," Economic Journal, Royal Economic Society, vol. 92(366), pages 399-404, June.
- Funatsu, Hideki, 1988. "A Note on the Stability of the Harris-Todaro Model with Capital Mobility," Economica, London School of Economics and Political Science, vol. 55(217), pages 119-21, February.
- Neary, J Peter, 1981. "On the Harris-Todaro Model with Intersectoral Capital Mobility," Economica, London School of Economics and Political Science, vol. 48(191), pages 219-34, August.
When requesting a correction, please mention this item's handle: RePEc:kap:openec:v:3:y:1992:i:1:p:37-49. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.