Rural-urban wage differential, rent seeking, and a justification for free trade

Article Abstract:

A model of rural-urban wage differentials serves as as an economic base for protectionism in developing countries. The model argues that urban manufacturing, by paying higher wages than the agricultural sector, offers developing countries increased comparative social cost advantages. Thus, manufacturing must be protected since free trade can allow foreign manufactures to undercut local industry. Protecting the urban manufacturing sector and allocating resources to manufactured products increases real national income. New research indicates that when rents, implicit in the wage differential, are dissipated by rent-seeking activities, market prices accurately reflect the social opportunity costs of production regardless of the wage distortion, indicating free trade is a more advantageous policy in terms of social costs than protectionism.

Analysis, Manufacturing industry, Manufacturing industries, Urban economics, Free trade, Agricultural research

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On the shadow wage of urban jobs in less-developed countries

Article Abstract:

Research into employment and wages in less developed countries indicates that, for jobs in the city, the worker's shadow wage may actually be less than the market wages for the position. Other studies of shadow wages in less developed countries are briefly reviewed, as a prelude to the development of a mathematical model that assesses income migrations within national boundaries. Conditions in which shadow wages are lower than market wages are identified, including: when agents are risk averse, and when agents are risk neutral but have certain attitudes toward consumption and saving activities.

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Policy comparisons with an agglomeration effects-augmented dual economy model

Article Abstract:

An examination of dual labor markets in less developed countries is presented which utilizes urban agglomeration economics as a labor pull element in the analysis. Specifically, the examination synthesizes the predicted income approach to country-to-city migration with the equilibrium city-size approach to urban expansion. The examination also provides for a way to rank subsidy policies using a simulation built on a well-defined model. Research results suggest that urbanization has a positive influence on structural change and economic development.

Economic development, Labor market, Metropolitan areas, Urbanization

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