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Reconsidering the effect of economic development on urban unemployment under non-homothetic preferences

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  • Takeuchi, Nobuyuki

Abstract

We reconsider the effect of economic development on urban unemployment by introducing households with non-homothetic preferences into a sector-specific capital version of the Harris-Todaro model. Contrary to previous studies, this work shows that, while urban development reduces urban unemployment, rural development expands it. As for labor growth, it normally increases urban unemployment.

Suggested Citation

  • Takeuchi, Nobuyuki, 2012. "Reconsidering the effect of economic development on urban unemployment under non-homothetic preferences," MPRA Paper 39378, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:39378
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    File URL: https://mpra.ub.uni-muenchen.de/39378/1/MPRA_paper_39378.pdf
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    References listed on IDEAS

    as
    1. Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 2001. "Beyond Balanced Growth," Review of Economic Studies, Oxford University Press, vol. 68(4), pages 869-882.
    2. 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.
    3. Echevarria, Cristina, 1997. "Changes in Sectoral Composition Associated with Economic Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 431-452, May.
    4. Jai-Young Choi & Eden S. H. Yu, 2006. "Industrial Targeting and Non-shiftable Capital in the Harris-Todaro Model," Review of International Economics, Wiley Blackwell, vol. 14(5), pages 910-921, November.
    5. Jonathan R. W. Temple, 2005. "Growth and Wage Inequality in a Dual Economy," Bulletin of Economic Research, Wiley Blackwell, vol. 57(2), pages 145-169, April.
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    More about this item

    Keywords

    sector-specific capital; Harris-Todaro model; economic development; non-homothetic preference; urban unemployment;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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