IDEAS home Printed from https://ideas.repec.org/p/isu/genstf/1994010108000011587.html
   My bibliography  Save this paper

The Harris-Todaro model of labor migration and its commercial policy implications

Author

Listed:
  • Chen, Jiong

Abstract

The pioneering work on rural-urban labor migration by John R. Harris and Michael P. Todaro in late 1960s to early 1970s generated such enormous interest and later contributions that they have become an important and unique component of development economics literature. The Harris-Todaro (HT) model admits the existence, in equilibrium, of a chronic large amount of urban unemployment due to the presence of urban minimum wages. The distinguishing feature of this model is that labor migration proceeds in response to urban-rural differences in expected earnings with the urban employment rate acting as an equilibrating force on such migration;This dissertation includes three articles and deals with the topic of international trade policies of an HT-type economy with labor surplus. The argument is carried out in the context of evaluating outward-oriented vs inward-oriented trade practices. The basic structure is that of Corden and Findlay, i.e., with intersectoral capital mobility and the small and open country assumption, whereupon necessary modifications are added to allow for the discussions on the effect of the presence of a service sector and risk averse workers;The essence of the results is that protectionist practices are welfare reducing for a two sector HT economy with risk neutral workers but maybe beneficial in the presence of a nontraded service sector or risk averse workers. More precisely, with a third sector, the nontraded service sector, that uses only labor as input, production subsidies to the import competing industry or import tariffs can be welfare improving. When workers are risk averse, the optimal police combination is a positive production subsidy and a positive tariff. Thus, large amount of urban unemployment (or, underemployment as characterized in the service sector in this dissertation) and risk attitude of the workers can be used as justification (as the infant industry argument) for some LDCs' trade restraining practices.

Suggested Citation

  • Chen, Jiong, 1994. "The Harris-Todaro model of labor migration and its commercial policy implications," ISU General Staff Papers 1994010108000011587, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:1994010108000011587
    as

    Download full text from publisher

    File URL: https://dr.lib.iastate.edu/server/api/core/bitstreams/13de554c-756a-42bf-b2d2-4d326f44f4a7/content
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Murray C. Kemp, 1968. "Some Issues In The Analysis Of Trade Gains," Oxford Economic Papers, Oxford University Press, vol. 20(2), pages 149-161.
    2. 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.
    3. Bhagwati, Jagdish N & Srinivasan, T N, 1974. "On Reanalyzing the Harris-Todaro Model: Policy Rankings in the Case of Sector-Specific Sticky Wages," American Economic Review, American Economic Association, vol. 64(3), pages 502-508, June.
    4. Choi, E. Kwan & Beladi, Hamid, 1993. "Optimal Trade Policies for a Small Open Economy," Staff General Research Papers Archive 672, Iowa State University, Department of Economics.
    5. Marjit, Sugata, 1991. "Agro-based industry and rural-urban migration : A case for an urban employment subsidy," Journal of Development Economics, Elsevier, vol. 35(2), pages 393-398, April.
    6. repec:bla:econom:v:42:y:1975:i:165:p:59-78 is not listed on IDEAS
    7. Hazari, Bharat R. & Sgro, Pasquale M., 1991. "Urban-rural structural adjustment, urban unemployment with traded and non-traded goods," Journal of Development Economics, Elsevier, vol. 35(1), pages 187-196, January.
    8. repec:bla:econom:v:57:y:1990:i:228:p:485-93 is not listed on IDEAS
    9. repec:bla:econom:v:60:y:1993:i:240:p:475-86 is not listed on IDEAS
    10. Batra, Raveendra N. & Seth, Avinash C., 1977. "Unemployment, tariffs and the theory of international trade," Journal of International Economics, Elsevier, vol. 7(3), pages 295-306, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Choi, Eun Kwan & Chen, Jiong, 1997. "Employment risk and optimal trade policies," Discussion Papers, Series II 338, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    2. Yabuuchi, Shigemi, 1997. "Urban unemployment, international labor mobility and welfare," Japan and the World Economy, Elsevier, vol. 9(1), pages 71-79, March.
    3. M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," Labor Economics Working Papers 22206, East Asian Bureau of Economic Research.
    4. Shigemi Yabuuchi, 1996. "Urban Unemployment And Development Policy: The Introduction Of An," Economics and Politics, Wiley Blackwell, vol. 8(3), pages 241-249, November.
    5. Beladi, Hamid & Chao, Chi-Chur, 2000. "Urban unemployment, rural labor monopsony, and optimal policies," Japan and the World Economy, Elsevier, vol. 12(1), pages 1-9, January.
    6. Gupta, Manash Ranjan, 1995. "Tax on foreign capital income and wage subsidy to the urban sector in the Harris-Todaro model," Journal of Development Economics, Elsevier, vol. 47(2), pages 469-479, August.
    7. Shigemi Yabuuchi, 2011. "Emigration promotion and urban unemployment," Economics Bulletin, AccessEcon, vol. 31(4), pages 2816-2823.
    8. M. Ali Khan & Po-Sheng Lin, 1982. "Sub -optimal Tariff Policy and Gains from Trade for LDCs with Urban Unemployment," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 21(2), pages 105-126.
    9. Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2010. "Skilled‐Unskilled Wage Inequality And Urban Unemployment," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 997-1007, October.
    10. Amitava Krishna Dutt, 1989. "Sectoral Balance: A Survey," WIDER Working Paper Series wp-1989-056, World Institute for Development Economic Research (UNU-WIDER).
    11. Goldsmith, Peter D. & Gunjal, Kisan & Ndarishikanye, Barnabe, 2004. "Rural-urban migration and agricultural productivity: the case of Senegal," Agricultural Economics, Blackwell, vol. 31(1), pages 33-45, July.
    12. Sarbajit Chaudhuri & Sushobhan Mahata & Salonkara Chaudhuri, 2022. "COVID-19 disaster and employment generation program in a developing economy," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(1), pages 46-64, June.
    13. Vandana Chandra & Ralph El-Chami & Jeffrey Fischer, 1991. "Development policies in the presence of unemployment and non-traded intermediate goods," Journal of Economics, Springer, vol. 54(1), pages 1-19, February.
    14. Andrés Rodríguez-Pose & Tobias Ketterer, 2015. "Do we follow the money? The drivers of migration across regions in the EU," REGION, European Regional Science Association, vol. 2, pages 27-45.
    15. Sugata Marjit & Reza Oladi, 2020. "Internal Migration, Minimum Rural Wage and Employment Guarantee: Recasting Harris-Todaro," Working Papers 2047, Indian Institute of Foreign Trade.
    16. 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.
    17. Gene M. Grossman, 1984. "International Competition and the Unionized Sector," Canadian Journal of Economics, Canadian Economics Association, vol. 17(3), pages 541-556, August.
    18. Gelan, Ayele, 2002. "Trade liberalisation and urban-rural linkages: a CGE analysis for Ethiopia," Journal of Policy Modeling, Elsevier, vol. 24(7-8), pages 707-738, November.
    19. 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.
    20. Mukherjee, Soumyatanu, 2012. "Revisiting the Apparent Paradox: Foreign Capital Inflow, Welfare Amelioration and ‘Jobless Growth’ with Agricultural Dualism and Non-traded Intermediate Input," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 27, pages 123-133.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genstf:1994010108000011587. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.