MINIMUM WAGE AND INCOME DISTRIBUTION IN THE HARRIS-TODARO MODEL

Vassilis Rapanos ()

Journal of Economic Development, 2005, vol. 30, issue 1, 1-14

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)
Date: 2005
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:30:y:2005:i:1:p:1-14

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