This topic contains a solution. Click here to go to the answer

Author Question: Suppose that, for example in India, a minimum wage is instituted in the modern sector above the ... (Read 36 times)

Lobcity

  • Hero Member
  • *****
  • Posts: 524
Suppose that, for example in India, a minimum wage is instituted in the modern sector above the market clearing wage, while the rural traditional wage is market determined at a lower level than in the modern sector.
 
  (a) Describe the impact of this policy on the rural labor force, urban unemployment, and the rural wage.
  (b) Will the modern sector wage be equal to the traditional sector wage after markets equilibrate through migration? Explain.
  (c) What effect might moving costs have on the equilibrium you described in part (b)?
  (d) What effect might the introduction of factories to rural areas have no the equilibrium you described in part (b)?

Question 2

Explain the dynamic rationale for economic integration among developing countries.
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

josephsuarez

  • Sr. Member
  • ****
  • Posts: 323
Answer to Question 1

(a) Use of the Todaro model is called for here. The rural wage will not necessarily change despite a reduction in the rural labor force as a result of migration. The minimum wage in the urban sector will encourage migration until the expected urban wage is equal to the rural wage. Urban unemployment will rise, both from migration and the minimum wage.
(b) Expected, not actual, urban wages will equal rural wages after equilibration.
(c) With moving costs, there would be less migration.
(d) With rural development, there would be less migration if this increased the rural wage.

Answer to Question 2

Similar to the infant industry argumentsee the chapter.




Lobcity

  • Member
  • Posts: 524
Reply 2 on: Jun 30, 2018
Excellent


laurnthompson

  • Member
  • Posts: 334
Reply 3 on: Yesterday
Gracias!

 

Did you know?

Computer programs are available that crosscheck a new drug's possible trade name with all other trade names currently available. These programs detect dangerous similarities between names and alert the manufacturer of the drug.

Did you know?

About 3% of all pregnant women will give birth to twins, which is an increase in rate of nearly 60% since the early 1980s.

Did you know?

Everyone has one nostril that is larger than the other.

Did you know?

Though Candida and Aspergillus species are the most common fungal pathogens causing invasive fungal disease in the immunocompromised, infections due to previously uncommon hyaline and dematiaceous filamentous fungi are occurring more often today. Rare fungal infections, once accurately diagnosed, may require surgical debridement, immunotherapy, and newer antifungals used singly or in combination with older antifungals, on a case-by-case basis.

Did you know?

Hyperthyroidism leads to an increased rate of metabolism and affects about 1% of women but only 0.1% of men. For most people, this increased metabolic rate causes the thyroid gland to become enlarged (known as a goiter).

For a complete list of videos, visit our video library