Labor markets in low income countries: distortions, mobility and migration
Rosenzweig, M.R.
Bulletin, Economic Development Center, Department of Economics/Department of Agricultural and Applied Economics, University of Minnesota (87-5): 70
1987
Document Number: 348337
The operation of low-income labour markets in developing countries is discussed. Section 1 looks at models directly concerned with employment and pricing of labour in the rural (agricultural) sector. It reviews models concerned with the shadow value of labour in agriculture that were motivated by the 'surplus labour' development models positing the redundancy of a large proportion of the rural labour force (Lewis (1954), Ranis and Fei (1961)). It also examines how rural wages are determined and their rigidity, the social and private costs of reallocating labour from agriculture to other activities, labour supply behaviour, labour market dualism and unemployment determination. Section 2 is concerned with risk-mitigating and effort-eliciting contractual arrangements involving rural labour and the organization of the agricultural enterprise in an environment characterized by incomplete markets. Section 3 considers the issue of whether labour is efficiently allocated across sectors and across geographical areas and problems of barriers to mobility. Models of migration incorporating human capital investments, information and capital constraints, uncertainty with respect to employment, riskiness in annual income, temporary migration, remittances, and heterogeneity in preferences and abilities among workers are discussed. Section 4 is concerned with urban labour markets, and issues related to the duality of urban labour markets and unemployment determination. The final section highlights issues about which there has been little research but which appear to be of importance to the study of developing economies, in particular, life-cycle and intergenerational labour market mobility.