MINIMUM WAGE AND INCOME DISTRIBUTION IN DEVELOPING COUNTRIES

Vassilis T. Rapanos
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Vassilis T. Rapanos: Department of Economics, University of Athens

International Trade from EconWPA

Abstract: The purpose of this paper is to examine the effects of a change in the minimum wage on income distribution and employment in a developing economy. The basic framework of our analysis is the original Harris- Todaro model, in which the only factor that is intersectorally mobile is labor. We analyze the effects of a change in the minimum wage on income distribution, sectoral employment and unemployment, both in the framework of a small open economy, and with endogenous commodity-price changes. Our findings differ from the results of the existing literature and shed light on the complex interaction between the urban and the rural sector of a developing economy.

Keywords: minimum wage; economies of scale; urban unemployment (search for similar items in EconPapers)
JEL-codes: F12 O18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-geo and nep-lab
Date: 2004-04-06
Note: Type of Document - pdf; pages: 18
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