On Reanalyzing the Harris-Todaro Model: Policy Rankings in the Case of Sector-Specific Sticky Wages

Authors

T.N. Srinivasan, Indian Statistical Institute
Jagdish N. Bhagwati, Columbia Law SchoolFollow

Document Type

Article

Publication Date

1974

Abstract

In a brilliant and pioneering paper, John Harris and Michael Todaro introduced a model with two sectors, manufacturing (urban) and agriculture (rural), a (sticky) minimum wage in manufacturing and consequent unemployment. They also introduced a labor allocation mechanism under which, instead of the usual equalization of actual wages, the actual rural wage was equated with the expected urban wage; the latter was defined as the (sticky) minimum wage weighted by the rate of employment, so that, unlike in the standard rigid-wage models of trade theory (for example, Gottfried Haberler, Bhagwati, Harry Johnson, Louis Lefeber, and Richard Brecher), the unemployment resulting from the minimum wage is to be construed as specific to the urban sector.

Disciplines

Labor and Employment Law | Labor Economics | Law

Comments

Copyright © 1974 by the American Economic Association.

Recommended Citation

T.N. Srinivasan & Jagdish N. Bhagwati, On Reanalyzing the Harris-Todaro Model: Policy Rankings in the Case of Sector-Specific Sticky Wages, 64 Am. Econ. Rev. 502 (1974).
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/4047