Factor Growth, Urban Unemployment and Welfare Under Variable Returns to Scale
This paper analyzes the welfare implications of factor growth (i.e., labor growth and capital accumulation), in the mobile-capital Harris-Todaro (H-T) model by allowing the presence of variable returns to scale (VRS). It is shown that in contrast to the constant returns to scale (CRS) case, factor growth under VRS may lower the welfare of a small country and can affect the urban unemployed-employed ratio and the factor prices. Further, under VRS, the Rybczynski-type of factor endowment-output response requires much more stringent conditions (vis-a vis the CRS case). [F12, O41]
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Volume (Year): 13 (1999)
Issue (Month): 4 ()
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References listed on IDEAS
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- Mayer, Wolfgang, 1974. "Variable Returns to Scale in General Equilibrium Theory: A Comment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(1), pages 225-35, February.
- Goldstein, Gerald S & Moses, Leon N, 1973. "A Survey of Urban Economics," Journal of Economic Literature, American Economic Association, vol. 11(2), pages 471-515, June.
- 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.
- 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.
- Beladi, Hamid & Naqvi, Nadeem, 1988. "Urban unemployment and non-immiserizing growth," Journal of Development Economics, Elsevier, vol. 28(3), pages 365-376, May.
- Jagdish N. Bhagwati, 1968. "Distortions and Immiserizing Growth: a Generalization," Review of Economic Studies, Oxford University Press, vol. 35(4), pages 481-485.
- Horst Herberg & Murray C. Kemp, 1969. "Some Implications of Variable Returns to Scale," Canadian Journal of Economics, Canadian Economics Association, vol. 2(3), pages 403-415, August.
- Das, Satya P., 1982. "Sector-specific minimum wages, economic growth, and some policy implications," Journal of Development Economics, Elsevier, vol. 10(1), pages 127-131, February.
- Batra, Raveendra N & Naqvi, Nadeem, 1987. "Urban Unemployment and the Gains from Trade," Economica, London School of Economics and Political Science, vol. 54(215), pages 381-95, August.
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