Environment and the Harris and Todaro Paradoxes

Makoto Tawada () and Azusa Nakamura ()
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Makoto Tawada: Nagoya University
Azusa Nakamura: Gifu Shotoku Gakuen University, 1-38

A chapter in International Trade and Economic Dynamics, 2009, pp 87-99 from Springer

Abstract: There are two well-known paradoxical results in the Harris and Todaro model. One is that subsidization policies for the manufacturing sector are not effective, but those for the agricultural sector are effective for reducing urban unemployment. The other is that unemployment expands as a result of an increase in the capital endowment, but contracts as a result of an increase in the labor endowment. In the present analysis, environmental elements are introduced into the model, and we show that a decrease in the discharge rate of pollution may enhance urban unemployment, while the paradoxical results that occur with a change in the factor endowment disappear.

Keywords: National Welfare; Minimum Wage; Agricultural Sector; Manufacturing Sector; Dynamic Adjustment (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-540-78676-4_10

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DOI: 10.1007/978-3-540-78676-4_10

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