Labor Surplus Economies

Gustav Ranis

No 28480, Center Discussion Papers from Yale University, Economic Growth Center

Abstract: The labor surplus economy model has as its basic premise the inability of unskilled agricultural labor markets to clear in countries with high man/land ratios. In such situations, the marginal product of labor is likely to fall below a bargaining wage, related to the average rather than the marginal product. The reallocation of such disguisedly unemployed workers by means of "balanced" intersectoral growth ultimately permits the entire economy to operate on neo-classical principles. Finally, the paper introduces open economy dimensions, indicates the existence of other labor surplus sub-sectors and briefly responds to neo-classical critiques on both theoretical and empirical grounds.

Keywords: Labor; and; Human; Capital (search for similar items in EconPapers)
Pages: 22
Date: 2004
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:yaleeg:28480

DOI: 10.22004/ag.econ.28480

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