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The Harris-Todaro Hypothesis

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  • Khan, M. Ali Khan

Abstract

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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  • Khan, M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," MPRA Paper 2201, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2201
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    Cited by:

    1. Muhammad Arshad Khan, 2007. "Foreign Direct Investment and Economic Growth: The Role of Domestic Financial Sector," PIDE-Working Papers 2007:18, Pakistan Institute of Development Economics.
    2. Muhammad Irfan, 2010. "A Review of the Labour Market Research at PIDE 1957-2009," PIDE Books, Pakistan Institute of Development Economics, number 2010:1 edited by Rashid Amjad & Aurangzeb A. Hashmi.
    3. Chaudhuri, Sarbajit & Kumar Dwibedi, Jayanta & Biswas, Anindya, 2017. "Subsidizing healthcare in the presence of market distortions," Economic Modelling, Elsevier, vol. 64(C), pages 539-552.
    4. Sarbajit Chaudhuri & Jayanta Kumar Dwibedi, 2017. "Foreign Direct Investment and Domestic Child Labor," Review of Development Economics, Wiley Blackwell, vol. 21(2), pages 383-403, May.

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    More about this item

    Keywords

    Harris-Todaro; Wages; Labour Economics; Labour Market; Rural to Urban Migration;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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