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Reconsidering the effect of economic development on urban unemployment under nonhomothetic preferences

Author

Listed:
  • Nobuyuki Takeuchi

    (Graduate School of International Cooperation Studies, Kobe University)

Abstract

We reconsider the effect of economic development on urban unemployment by introducing households with nonhomothetic preferences into a sector-specific capital version of the Harris–Todaro model. Contrary to previous studies, this work shows that urban unemployment decreases with urban development but increases with rural development. As for labour growth, it normally increases urban unemployment.

Suggested Citation

  • Nobuyuki Takeuchi, 2015. "Reconsidering the effect of economic development on urban unemployment under nonhomothetic preferences," Economics Bulletin, AccessEcon, vol. 35(1), pages 313-321.
    • Handle: RePEc:ebl:ecbull:eb-14-00594
    as

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    References listed on IDEAS

    as
    1. Shigemi Yabuuchi, 1998. "Urban Unemployment, Factor Accumulation, and Welfare," Review of Development Economics, Wiley Blackwell, vol. 2(1), pages 31-40, February.
    2. Shigemi Yabuuchi & Hamid Beladi, 2001. "Urban unemployment, informal sector and development policies," Journal of Economics, Springer, vol. 74(3), pages 301-314, October.
    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. 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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    6. Beladi, Hamid & Naqvi, Nadeem, 1988. "Urban unemployment and non-immiserizing growth," Journal of Development Economics, Elsevier, vol. 28(3), pages 365-376, May.
    7. repec:bla:econom:v:57:y:1990:i:227:p:371-82 is not listed on IDEAS
    8. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    9. Lall, Somik V. & Selod, Harris & Shalizi, Zmarak, 2006. "Rural-urban migration in developing countries : a survey of theoretical predictions and empirical findings," Policy Research Working Paper Series 3915, The World Bank.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Harris-Todaro model; economic development; nonhomothetic preferences; urban unemployment; sector-specific capital;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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