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Labor Surplus Economies

Author

Listed:
  • Gustav Ranis

    (Economic Growth Center, Yale University)

Abstract

The labor surplus economy model has as its basic premise the inability of unskilled agricultural labor markets to clear in countries with high man/land ratios. In such situations, the marginal product of labor is likely to fall below a bargaining wage, related to the average rather than the marginal product. The reallocation of such disguisedly unemployed workers by means of "balanced" intersectoral growth ultimately permits the entire economy to operate on neo-classical principles. Finally, the paper introduces open economy dimensions, indicates the existence of other labor surplus sub-sectors and briefly responds to neo-classical critiques on both theoretical and empirical grounds.

Suggested Citation

  • Gustav Ranis, 2004. "Labor Surplus Economies," Working Papers 900, Economic Growth Center, Yale University.
    • Handle: RePEc:egc:wpaper:900
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    File URL: http://www.econ.yale.edu/growth_pdf/cdp900.pdf
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    References listed on IDEAS

    as
    1. Fafchamps, Marcel, 1992. "Solidarity Networks in Preindustrial Societies: Rational Peasants with a Moral Economy," Economic Development and Cultural Change, University of Chicago Press, vol. 41(1), pages 147-174, October.
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    Cited by:

    1. Haryo Aswicahyono & Chris Manning, 2011. "Exports and Job Creation in Indonesia Before and After the Asian Financial Crisis," Departmental Working Papers 2011-11, The Australian National University, Arndt-Corden Department of Economics.
    2. Grabrucker, Katharina, 2021. "Effects of internal rural-urban migration on rural non-farm enterprises: Evidence from Thailand and Vietnam," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-85-21, University of Passau, Faculty of Business and Economics.

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    More about this item

    Keywords

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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • 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

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