Abstract
This paper extends the neoclassical, Harris-Todaro model of urban-rural migration to the case of production uncertainty in the agricultural sector. A unique feature of the Harris-Todaro model is an exogenously determined minimum wage in the urban sector that exceeds the rural wage. Migration occurs until the rural wage equals the expected urban wage („expected” due to employment uncertainty). The effects of a change in the minimum wage upon regional outputs, resource allocation, factor rewards, expected profits, and expected national income are explored, and the influence of production uncertainty upon the obtained results are delineated.
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Ingene, C.A., Yu, E.S.H. Urban-rural migration: Uncertainty and the effect of a change in the minimum wage. Papers of the Regional Science Association 67, 135–145 (1989). https://doi.org/10.1007/BF01934672
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DOI: https://doi.org/10.1007/BF01934672