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Title: |
Factor Growth, Urban Unemployment and Welfare under Variable Returns to
Scale |
| Author: |
Choi, Jai-Young |
| Author
Affiliation: |
Lamar U |
| Source: |
International Economic Journal, Winter 1999, v. 13, no. 4, pp. 17-34 |
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Publication Date: |
Winter 1999 |
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Abstract: |
This paper analyzes the welfare
implications of factor growth (i.e., labor growth and capital
accumulation), in the mobile-capital Harris-Todaro (H-T) model by
allowing the presence of variable returns to scale (VRS). It is shown
that in contrast to the constant returns to scale (CRS) case, factor
growth under VRS may lower the welfare of a small country and can affect
the urban unemployed-employed ratio and the factor prices. Further,
under VRS, the Rybczynski-type of factor endowment-output response
requires much more stringent conditions (vis-a-vis the CRS case). |
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