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Minimum Wage And Income Distribution In Developing Countries

  • Vassilis T. Rapanos

    (Department of Economics, University of Athens)

The purpose of this paper is to examine the effects of a change in the minimum wage on income distribution and employment in a developing economy. The basic framework of our analysis is the original Harris- Todaro model, in which the only factor that is intersectorally mobile is labor. We analyze the effects of a change in the minimum wage on income distribution, sectoral employment and unemployment, both in the framework of a small open economy, and with endogenous commodity-price changes. Our findings differ from the results of the existing literature and shed light on the complex interaction between the urban and the rural sector of a developing economy.

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File URL: http://econwpa.repec.org/eps/it/papers/0404/0404005.pdf
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Paper provided by EconWPA in its series International Trade with number 0404005.

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Length: 18 pages
Date of creation: 06 Apr 2004
Date of revision:
Handle: RePEc:wpa:wuwpit:0404005
Note: Type of Document - pdf; pages: 18
Contact details of provider: Web page: http://econwpa.repec.org

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  1. 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.
  2. Neary, J Peter, 1981. "On the Short-Run Effects of Technological Progress," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 224-33, July.
  3. Imam, M Hasan & Whalley, John, 1985. "Incidence Analysis of a Sector-specific Minimum Wage in a Two-Sector Harris-Todaro Model," The Quarterly Journal of Economics, MIT Press, vol. 100(1), pages 207-24, February.
  4. Neary, J Peter, 1978. "Short-Run Capital Specificity and the Pure Theory of International Trade," Economic Journal, Royal Economic Society, vol. 88(351), pages 488-510, September.
  5. Jai-Young Choi, 1999. "Factor Growth, Urban Unemployment and Welfare Under Variable Returns to Scale," International Economic Journal, Taylor & Francis Journals, vol. 13(4), pages 17-34.
  6. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
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