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Trade Reform, Capital Mobility, and Efficiency Wage in a Harris-Todaro Economy

Author

Listed:
  • Titas Kumar Bandopadhyay

    (Bagnan College, Bagnan, Howrah, West Bengal, India.)

Abstract

The main purpose of this paper is to analyse the impact of trade reform on unemployment and social welfare in a Harris-Todaro (1970) economy with efficiency wage and capital mobility. The analysis shows that capital mobility plays an important role to influence the impact of trade reform on unemployment and social welfare. We find that trade reform raises urban unemployment and produces an ambiguous effect on social welfare when capital is perfectly mobile among the three sectors. However, such policy lowers unemployment and raises social welfare when capital is imperfectly mobile.

Suggested Citation

  • Titas Kumar Bandopadhyay, 2007. "Trade Reform, Capital Mobility, and Efficiency Wage in a Harris-Todaro Economy," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(2), pages 163-174.
  • Handle: RePEc:pid:journl:v:46:y:2007:i:2:p:163-174
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade Reform; Capital Mobility; Efficiency Wage;

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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