Internal Migration, Minimum Rural Wage and Employment Guarantee: Recasting Harris-Todaro

Sugata Marjit () and Reza Oladi
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Sugata Marjit: Indian Institute of Foreign Trade,Kolkata, India

No 2047, Working Papers from Indian Institute of Foreign Trade

Abstract: We explore the theoretical implications of the largest employment guarantee in the world, implemented by India through the Mahatma Gandhi National Rural Employment Guarantee Act, in terms of a modified Harris-Todaro (1970) model. We show that the scheme which prescribes a minimum rural wage along with employment guarantee can have ambiguous effects on propensity to migrate from rural areas and may increase aggregate unemployment. We further explore the effects of these distortions by constructing an elaborate general equilibrium model that incorporates an informal sector.

Keywords: Rural Minimum Wage; migration; employment guarantee; MGNREGA (search for similar items in EconPapers)
JEL-codes: F11 O17 O18 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2020
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Citations: View citations in EconPapers (1)

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