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The Harris-Todaro Hypothesis

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  • M. Ali Khan

    (PIDE)

Abstract
The Harris-Todaro hypothesis replaces the equality of wages by the equality of expected wages as the basic equilibrium condition in a segmented but homogeneous labour market, and in so doing it generates an equilibrium level of urban unemployment when a mechanism for the determination of urban wages is specified. This article reviews work in which the Harris-Todaro hypothesis is embedded in canonical models of trade theory in order to investigate a variety of issues in development economics. These include the desirability (or the lack thereof) of foreign investment, the complications of an informal sector, and the presence of clearly identifiable ethnic groups.

Suggested Citation

  • M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," Labor Economics Working Papers 22206, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:laborw:22206
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    Cited by:

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    3. Muhammad Irfan, 2010. "A Review of the Labour Market Research at PIDE 1957-2009," PIDE Books, Pakistan Institute of Development Economics, number 2010:1 edited by Rashid Amjad & Aurangzeb A. Hashmi.
    4. Chaudhuri, Sarbajit & Kumar Dwibedi, Jayanta & Biswas, Anindya, 2017. "Subsidizing healthcare in the presence of market distortions," Economic Modelling, Elsevier, vol. 64(C), pages 539-552.

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    More about this item

    Keywords

    Harris-Todaro; Wages; labour economics; Labour Market; Rural to Urban Migration;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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