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A condition for the reduction of urban unemployment in the Harris–Todaro model

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  • Masaharu Nagashima

    (Saitama University)

Abstract

The purpose of this paper is to re-examine the Harris–Todaro model and Todaro paradox in developing countries. Specifically, we address the question of whether new job creation in urban areas always increases urban unemployment. The results of this analysis lead to the derivation of a necessary and sufficient condition under which urban unemployment does not increase when urban social infrastructure is improved and new employment is created. In short, this condition circumvents Todaro paradox. It involves the relationship between an institutionally and legally fixed urban minimum wage in the model and agricultural productivity. The condition itself is simple, but it offers significant suggestions for actual policy design.

Suggested Citation

  • Masaharu Nagashima, 2018. "A condition for the reduction of urban unemployment in the Harris–Todaro model," Asia-Pacific Journal of Regional Science, Springer, vol. 2(1), pages 243-255, April.
    • Handle: RePEc:spr:apjors:v:2:y:2018:i:1:d:10.1007_s41685-018-0070-8
    DOI: 10.1007/s41685-018-0070-8
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    More about this item

    Keywords

    Harris–Todaro model; Domestic migration; Domestic wage gap; Informal sector; Urban unemployment;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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