Technical progress, urban unemployment, outputs, and welfare under variable returns to scale

This paper analyzes the implications of technical progress for a small Harris–Todaro (H–T) economy under variable returns to scale (VRS). It is shown that under VRS, technical progress occurring either in the agriculture or the manufacturing may be immiserizing; the effects of technical progress on...

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Bibliographic Details
Published in:International review of economics & finance 2002, Vol.11 (4), p.411-425
Main Authors: Choi, Jai-Young, Yu, Eden S.H., Jin, Jang C.
Format: Article
Language:English
Subjects:
Economic models
Economies of scale
Harris–Todaro model
Immiserizing growth
Studies
Technical progress
Unemployment
Urban unemployment
Variable returns to scale
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Summary:This paper analyzes the implications of technical progress for a small Harris–Todaro (H–T) economy under variable returns to scale (VRS). It is shown that under VRS, technical progress occurring either in the agriculture or the manufacturing may be immiserizing; the effects of technical progress on sectoral outputs, factor prices, urban unemployment, and welfare crucially depend on the signs and the relative magnitudes of sectoral elasticities of returns to scale and the employment effect; the Corden–Findlay type of ultrabiased output effect of technical progress in the constant returns to scale (CRS) H–T model carries over to the case of VRS, but with much more stringent conditions than the CRS case.
ISSN:1059-0560
1873-8036
DOI:10.1016/S1059-0560(01)00090-9