Regional development and the value of migratory labor-some perverse economic/technological interactions

Gunter Schramm

The Annals of Regional Science, 1988, vol. 22, issue 1, 8-27

Abstract: It has long been agreed, that the economic value of unemployed labor is less than its wage rate. Shadow-pricing of such labor is common practice in economic analysis. The usual outcome of such shadow-pricing is that the economic rate of return of a project is enhanced. But this is not always the case. Using the data from a soil productivity enhancement project in Mexico, it is shown that the use of essential, labor-saving technology in a project designed to increase output and Income may reduce, rather than increase economic benefits, if the displaced labor has no alternative employment opportunities, while the opposite is the case if such alternatives exist. Copyright Annals of Regional Science 1988

Date: 1988
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DOI: 10.1007/BF01952840

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