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Internal Migration, Minimum Rural Wage and Employment Guarantee: Recasting Harris-Todaro

Author

Listed:
  • Sugata Marjit

    (Indian Institute of Foreign Trade,Kolkata, India)

  • Reza Oladi

    (Department of Applied Economics, Utah State University)

Abstract
We explore the theoretical implications of the largest employment guarantee in the world, implemented by India through the Mahatma Gandhi National Rural Employment Guarantee Act, in terms of a modified Harris-Todaro (1970) model. We show that the scheme which prescribes a minimum rural wage along with employment guarantee can have ambiguous effects on propensity to migrate from rural areas and may increase aggregate unemployment. We further explore the effects of these distortions by constructing an elaborate general equilibrium model that incorporates an informal sector.

Suggested Citation

  • Sugata Marjit & Reza Oladi, 2020. "Internal Migration, Minimum Rural Wage and Employment Guarantee: Recasting Harris-Todaro," Working Papers 2047, Indian Institute of Foreign Trade.
    • Handle: RePEc:ift:wpaper:2047
    as

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    References listed on IDEAS

    as
    1. Bhagwati, Jagdish N & Srinivasan, T N, 1974. "On Reanalyzing the Harris-Todaro Model: Policy Rankings in the Case of Sector-Specific Sticky Wages," American Economic Review, American Economic Association, vol. 64(3), pages 502-508, June.
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    3. Basu, Arnab K. & Chau, Nancy H. & Kanbur, Ravi, 2009. "A theory of employment guarantees: Contestability, credibility and distributional concerns," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 482-497, April.
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    Cited by:

    1. Jiancai Pi & Shuxi Duan, 2023. "Appropriation, migration, and unemployment," Australian Economic Papers, Wiley Blackwell, vol. 62(3), pages 430-456, September.

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    More about this item

    Keywords

    Rural Minimum Wage; migration; employment guarantee; MGNREGA;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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