Dynamic Stability, Wage Subsidies and the Generalized Harris-Todaro Model

M. Ali Khan

Abstract


In a recent contribution, Neary has shown that paradoxes and
instability correspond in the two-sector model with proportional
differentials in factor returns, leading one to downgrade the importance
of these paradoxes. In this paper, we examine the extent to which this
result extends to the Generalized Harris-Todaro Model of which the
proportional differential setting is a simple special case. In
developing the argument, we generate a variety of comparative-statics
results of consequence for development theory. The implications of these
results for the conduct of commercial policy are also brought
out.

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DOI: https://doi.org/10.30541/v19i1pp.1-24

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