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Factor Growth, Urban Unemployment and Welfare Under Variable Returns to Scale

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  • Jai-Young Choi

Abstract

This paper analyzes the welfare implications of factor growth (i.e., labor growth and capital accumulation), in the mobile-capital Harris-Todaro (H-T) model by allowing the presence of variable returns to scale (VRS). It is shown that in contrast to the constant returns to scale (CRS) case, factor growth under VRS may lower the welfare of a small country and can affect the urban unemployed-employed ratio and the factor prices. Further, under VRS, the Rybczynski-type of factor endowment-output response requires much more stringent conditions (vis-a vis the CRS case). [F12, O41]

Suggested Citation

  • 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.
    • Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:17-34
    DOI: 10.1080/10168739900000042
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    References listed on IDEAS

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    Cited by:

    1. Khan, M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," MPRA Paper 2201, University Library of Munich, Germany.
    2. Titas Kumar Bandopadhyay, 2007. "Trade Reform, Capital Mobility, and Efficiency Wage in a Harris-Todaro Economy," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(2), pages 163-174.
    3. Andreas Pfingsten & Reiner Wolff, 2009. "Factor Supply Changes in Small Open Economies: Rybczynski Derivatives under Increasing Marginal Costs," Finnish Economic Papers, Finnish Economic Association, vol. 22(1), pages 9-20, Spring.
    4. Vassilis T. Rapanos, 2005. "Minimum Wage And Income Distribution In The Harris-Todaro Model," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 1-14, June.
    5. Vassilis T. Rapanos, 2004. "Minimum Wage And Income Distribution In Developing Countries," International Trade 0404005, University Library of Munich, Germany.

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