Ira Gang
Rutgers University
Department of Economics
E-mail: gang@economics.rutgers.edu
Item Number: [J9]
Title: Welfare Aspects of a Harris-Todaro Economy with Underemployment
and Variable Prices
Abstract: In this paper we propose an alternative method of incorporating
underemploy-ment into the HT framework. This method allows us to derive the
welfare aspects of a policy in the presence of a HT labor market both with,
and without, under-employment. Within this framework and allowing for endogenous
price determination we study the welfare aspects of wage policies. In their
1970 paper Harris and Todaro considered policies aimed at decreasing open
unemployment.
The implicit assumption there was that social welfare is inversely related
to open unemployment. However, if individual labor welfare is determined
by decisions arrived at by maximizing expected income, it may not always
be true, as will be shown, that more unemployment is bad in the individual
welfare sense.
Reference: Ira N. Gang and Shubhashis Gangopadhyay, Welfare Aspects
of a Harris-Todaro Economy with Underemployment and Variable Prices (with
Shubhashis Gangopadhyay), The Developing Economies, 25 (1987) 203-219.
Co-Author Information:
Shubhashis Gangopadhyay
India Development Foundation
E-Mail: shubg@vsnl.com
Download: Email
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