IDEAS home Printed from https://ideas.repec.org/a/spr/apjors/v2y2018i1d10.1007_s41685-018-0070-8.html
   My bibliography  Save this article

A condition for the reduction of urban unemployment in the Harris–Todaro model

Author

Listed:
  • Masaharu Nagashima

    (Saitama University)

Abstract

The purpose of this paper is to re-examine the Harris–Todaro model and Todaro paradox in developing countries. Specifically, we address the question of whether new job creation in urban areas always increases urban unemployment. The results of this analysis lead to the derivation of a necessary and sufficient condition under which urban unemployment does not increase when urban social infrastructure is improved and new employment is created. In short, this condition circumvents Todaro paradox. It involves the relationship between an institutionally and legally fixed urban minimum wage in the model and agricultural productivity. The condition itself is simple, but it offers significant suggestions for actual policy design.

Suggested Citation

  • Masaharu Nagashima, 2018. "A condition for the reduction of urban unemployment in the Harris–Todaro model," Asia-Pacific Journal of Regional Science, Springer, vol. 2(1), pages 243-255, April.
    • Handle: RePEc:spr:apjors:v:2:y:2018:i:1:d:10.1007_s41685-018-0070-8
    DOI: 10.1007/s41685-018-0070-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41685-018-0070-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41685-018-0070-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bhagwati, Jagdish N & Srinivasan, T N, 1974. "On Reanalyzing the Harris-Todaro Model: Policy Rankings in the Case of Sector-Specific Sticky Wages," American Economic Review, American Economic Association, vol. 64(3), pages 502-508, June.
    2. 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 219-234, August.
    3. Todaro, Michael P, 1969. "A Model for Labor Migration and Urban Unemployment in Less Developed Countries," American Economic Review, American Economic Association, vol. 59(1), pages 138-148, March.
    4. Takagi, Yasuoki, 1984. "The migration function and the Todaro paradox," Regional Science and Urban Economics, Elsevier, vol. 14(2), pages 219-230, May.
    5. Khan, M. Ali, 1982. "Tariffs, foreign capital and immiserizing growth with urban unemployment and specific factors of production," Journal of Development Economics, Elsevier, vol. 10(2), pages 245-256, April.
    6. 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.
    7. Jan K. Brueckner & Hyun‐A Kim, 2001. "Land Markets in the Harris‐Todaro Model: A New Factor Equilibrating Rural‐Urban Migration," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 507-520, August.
    8. Yabuuchi, Shigemi & Chaudhuri, Sarbajit, 2007. "International migration of labour and skilled-unskilled wage inequality in a developing economy," Economic Modelling, Elsevier, vol. 24(1), pages 128-137, January.
    9. Stark, Oded & Ranjan Gupta, Manash & Levhari, David, 1991. "Equilibrium urban unemployment in developing countries : Is migration the culprit?," Economics Letters, Elsevier, vol. 37(4), pages 477-482, December.
    10. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2008. "Fair Wage Hypothesis, International Factor Mobility and Skilled-Unskilled Wage Inequality in a Developing Economy," MPRA Paper 9303, University Library of Munich, Germany.
    11. Joseph E. Stiglitz, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC's: The Labor Turnover Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 88(2), pages 194-227.
    12. Arellano, Jose-Paulo, 1981. "Do more jobs in the modern sector increase urban unemployment?," Journal of Development Economics, Elsevier, vol. 8(2), pages 241-247, April.
    13. Mayer, Wolfgang, 1974. "Short-Run and Long-Run Equilibrium for a Small Open Economy," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 955-967, Sept./Oct.
    14. M. Ali Khan, 1982. "Social Opportunity Costs and Immiserizing Growth: Some Observations on the Long Run Versus the Short," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(2), pages 353-362.
    15. Blomqvist, A. G., 1978. "Urban job creation and unemployment in LDCs : Todaro vs. Harris and Todaro," Journal of Development Economics, Elsevier, vol. 5(1), pages 3-18, March.
    16. Ronald W. Jones, 2018. "The Structure of Simple General Equilibrium Models," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 4, pages 61-84, World Scientific Publishing Co. Pte. Ltd..
    17. Chaudhuri, Sarbajit, 2008. "Wage inequality in a dual economy and international mobility of factors: Do factor intensities always matter?," Economic Modelling, Elsevier, vol. 25(6), pages 1155-1164, November.
    18. Raimondos, Pascalis, 1993. "On the Todaro paradox," Economics Letters, Elsevier, vol. 42(2-3), pages 261-267.
    19. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 9(1), pages 58-73.
    20. Khan, M. Ali, 1980. "The Harris-Todaro hypothesis and the Heckscher-Ohlin-Samuelson trade model : A synthesis," Journal of International Economics, Elsevier, vol. 10(4), pages 527-547, November.
    21. Lee, Chul-In, 2008. "Migration and the wage and unemployment gaps between urban and non-urban sectors: A dynamic general equilibrium reinterpretation of the Harris-Todaro equilibrium," Labour Economics, Elsevier, vol. 15(6), pages 1416-1434, December.
    22. Zarembka, Paul, 1970. "Labor Migration and Urban Unemployment: Comment," American Economic Review, American Economic Association, vol. 60(1), pages 184-186, March.
    23. Mazumdar, Dipak, 1976. "The Rural-Urban Wage Gap, Migration, and the Shadow Wage," Oxford Economic Papers, Oxford University Press, vol. 28(3), pages 406-425, November.
    24. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Azusa Nakamura, 2020. "Environmental disparities in an urban area, rural–urban migration, and urban unemployment," Asia-Pacific Journal of Regional Science, Springer, vol. 4(2), pages 463-477, June.
    2. Moriki Hosoe, 2018. "Special issue (part II) on economic analysis of law, politics, and regions," Asia-Pacific Journal of Regional Science, Springer, vol. 2(1), pages 79-82, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zenou, Yves, 2005. "The Todaro Paradox Revisited," IZA Discussion Papers 1861, Institute of Labor Economics (IZA).
    2. Brueckner, Jan K. & Zenou, Yves, 1999. "Harris-Todaro models with a land market," Regional Science and Urban Economics, Elsevier, vol. 29(3), pages 317-339, May.
    3. Zenou, Yves, 2008. "Job search and mobility in developing countries. Theory and policy implications," Journal of Development Economics, Elsevier, vol. 86(2), pages 336-355, June.
    4. M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," Labor Economics Working Papers 22206, East Asian Bureau of Economic Research.
    5. Yves Zenou, 2011. "Rural–Urban Migration And Unemployment: Theory And Policy Implications," Journal of Regional Science, Wiley Blackwell, vol. 51(1), pages 65-82, February.
    6. Takao FUKUCHI, 1998. "A Simulation Analysis Of The Urban Informal Sector," The Developing Economies, Institute of Developing Economies, vol. 36(3), pages 225-256, September.
    7. Amitava Krishna Dutt, 1989. "Sectoral Balance: A Survey," WIDER Working Paper Series wp-1989-056, World Institute for Development Economic Research (UNU-WIDER).
    8. Marjit, Sugata & Beladi, Hamid, 2003. "Possibility or impossibility of paradoxes in the small country Harris-Todaro framework: a unifying analysis," Journal of Development Economics, Elsevier, vol. 72(1), pages 379-385, October.
    9. Lall, Somik V. & Selod, Harris & Shalizi, Zmarak, 2006. "Rural-urban migration in developing countries : a survey of theoretical predictions and empirical findings," Policy Research Working Paper Series 3915, The World Bank.
    10. Lee, Chul-In, 2008. "Migration and the wage and unemployment gaps between urban and non-urban sectors: A dynamic general equilibrium reinterpretation of the Harris-Todaro equilibrium," Labour Economics, Elsevier, vol. 15(6), pages 1416-1434, December.
    11. Pi, Jiancai & Zhang, Pengqing, 2016. "Hukou system reforms and skilled-unskilled wage inequality in China," China Economic Review, Elsevier, vol. 41(C), pages 90-103.
    12. Chaudhuri, Sarbajit & Ghosh, Arnab & Banerjee, Dibyendu, 2018. "Can public subsidy on education necessarily improve wage inequality?," International Review of Economics & Finance, Elsevier, vol. 54(C), pages 165-177.
    13. Hamid Beladi & Chi‐Chur Chao & Mong Shan Ee & Daniel Hollas, 2020. "Urban development, excessive entry of firms and wage inequality in developing countries," The World Economy, Wiley Blackwell, vol. 43(1), pages 212-238, January.
    14. M. Ali Khan & Po-Sheng Lin, 1982. "Sub -optimal Tariff Policy and Gains from Trade for LDCs with Urban Unemployment," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 21(2), pages 105-126.
    15. Vandana Chandra & Ralph El-Chami & Jeffrey Fischer, 1991. "Development policies in the presence of unemployment and non-traded intermediate goods," Journal of Economics, Springer, vol. 54(1), pages 1-19, February.
    16. Daisuke Matsuzaki & Yoshiyasu Ono, 2021. "Regional subsidies and interregional labor movement," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 66(3), pages 557-577, June.
    17. Yabuuchi, Shigemi, 1997. "Urban unemployment, international labor mobility and welfare," Japan and the World Economy, Elsevier, vol. 9(1), pages 71-79, March.
    18. Jai‐Young Choi & Eden S. H. Yu, 2010. "Imperfect Capital Mobility: A General Approach to the Two‐Sector Harris Todaro Model," Review of International Economics, Wiley Blackwell, vol. 18(1), pages 81-94, February.
    19. Pi, Jiancai & Zhou, Yu, 2012. "Public infrastructure provision and skilled–unskilled wage inequality in developing countries," Labour Economics, Elsevier, vol. 19(6), pages 881-887.
    20. Gupta, Manash Ranjan, 1995. "Tax on foreign capital income and wage subsidy to the urban sector in the Harris-Todaro model," Journal of Development Economics, Elsevier, vol. 47(2), pages 469-479, August.

    More about this item

    Keywords

    Harris–Todaro model; Domestic migration; Domestic wage gap; Informal sector; Urban unemployment;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

    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:spr:apjors:v:2:y:2018:i:1:d:10.1007_s41685-018-0070-8. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.