URBAN‐RURAL MIGRATION: EFFECTS OF A CHANGE IN AGRICULTURAL UNCERTAINTY UPON RESOURCE ALLOCATION

Charles A. Ingene

Papers in Regional Science, 1991, vol. 70, issue 1, 81-95

Abstract: ABSTRACT This paper compares the effects of four types of change in production uncertainty upon resource allocation in the neoclassical Harris Todaro model and the neoclassical international trade theory model. The unique distinction of the former model is an exogenously mandated minimum wage in one sector of the economy that generates urban unemployment. In contrast, the latter model (which is a special case of the former) has free market forces operating throughout, so that full employment of all resources is assured. It will be shown that unemployment, or its absence, has a major influence upon the manner in which factor rewards and capital‐labor ratios respond to changes in production uncertainty.

Date: 1991
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https://doi.org/10.1111/j.1435-5597.1991.tb01721.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:presci:v:70:y:1991:i:1:p:81-95

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