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The Harris-Todaro Hypothesis

  • M. Ali Khan

    (PIDE)

The Harris-Todaro hypothesis replaces the equality of wages by the equality of expected wages as the basic equilibrium condition in a segmented but homogeneous labour market, and in so doing it generates an equilibrium level of urban unemployment when a mechanism for the determination of urban wages is specified. This article reviews work in which the Harris-Todaro hypothesis is embedded in canonical models of trade theory in order to investigate a variety of issues in development economics. These include the desirability (or the lack thereof) of foreign investment, the complications of an informal sector, and the presence of clearly identifiable ethnic groups.

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Paper provided by East Asian Bureau of Economic Research in its series Labor Economics Working Papers with number 22206.

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Date of creation: Jan 2007
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Handle: RePEc:eab:laborw:22206
Contact details of provider: Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
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