Lecture Notes for ECON 731 - Economic Development II at Yale (Yale)

Notes Information

Material Type:Class Note
Class:ECON 731 - Economic Development II
University:Yale University
  • Sharecropping
  • Horizontally
  • Assumptions
  • Constant Flow
  • Traditional
  • Acquisition
  • Institutional
  • Terminal Value
  • Consumption
  • Three-Year Period
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"Surplus" Labor, Underemployment and Unemployment What happens to rural output when laborers leave for the industrial sector? "Surplus Labor" models assumed no effect - a costless shift How is this possible? Two routes: 1. Family labor-supply behavior (A. Lewis, A. Sen) 2. Unemployment and rigid wages (Mirrlees, Stiglitz) Distinguish: number of workers (N), time worked per worker (h), effort per time worked (8) Labor-Supply Model 1: Autarchy (Sen, 1966) Each household has N workers and n total members (dependents) Owns a productive asset (land) A Technology: X = F(L, A), where L=Nh Family welfare function: U = U(c, l), where c = X/n FONC: Uc/Ul = (N/n)FL Removal of laborer leaves mp unchanged if mrs invariant: fully compensatory family labor supply Labor-supply Model 2: Labor market (family, hired labor perfect substitutes: separability) c* = B/n + Wh(N/n): per-capita family consumption, where B = profits from cultivation Does the removal of a worker (reduction in N) lead to an increase in...

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