Reconsidering the effect of economic development on urban unemployment under non-homothetic preferences
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.
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- Sergio Rebelo & Piyabha Kongsamut & Danyang Xie, 2001.
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