Shigemi Yabuuchi

Can International Factor Mobility Reduce Wage Inequality in a Dual Economy

We introduce international labor mobility in a three-sector general equilibrium model with rural-urban migration. We demonstrate that under some reasonable conditions an inflow of foreign skilled labor (capital) can reduce skilled-unskilled wage inequality.

Urban unemployment, international capital mobility and development policy

Abstract We introduce international capital mobility into the Harris-Todaro model and examine the effectiveness of some policy tools. The main message is such that a wage subsidy in manufacturing and a tariff are no longer effective to improve welfare, while a wage subsidy in agriculture remains valid under the assumption of international capital mobility. This is in sharp contrast to the result obtained for the original Harris-Todaro model.

Tariff-induced capital inflow and welfare in the presence of unemployment and informal sector

Abstract The co-existence of rural–urban migration and persistent urban unemployment is a common feature in developing countries. In this paper we draw on the Harris–Todaro model and extend it to include an urban informal sector where the product of the informal sector is used as an industrial input in the urban formal sector. We derive and contrast various welfare effects of tariff-induced capital inflow. Also, we analyze the welfare implications of employment subsidy as the policy instrument in the presence of international capital mobility.

Foreign Capital and Skilled-Unskilled Wage Inequality in a Developing Economy with Non-Traded Goods

The existing theoretical literature does not take into consideration the existence of non-traded goods and the nature of capital mobility between the traded and the non-traded sectors in analyzing the consequences of liberalized investment policies on the relative wage inequality in the developing countries. The present paper purports to fill in this gap using two four-sector general equilibrium models reasonable for a developing economy. We have found that inflows of foreign capital usually improve the wage inequality when the low-skill sector is capital-intensive. But, the relative wage gap may widen if the high-skill sector is capital-intensive. When the non-traded sector produces a non-traded final commodity wage inequality worsens if the low-skill sector is capital-intensive and employs only a very small proportion of the unskilled workforce and if the primary export sector is unskilled labour-intensive. Appropriate policy recommendations for improving the wage inequality have also been made.

A note on tariff-induced capital inflow and immiserization in the presence of taxation of foreign profits

Abstract This paper develops further the formal model of tariff-induced capital inflow and immiserization presented by Bhagwati (1973). We set down the necessary and sufficient condition under which immiserization will follow. In addition, it will be shown that the possibility of immiserization depends crucially on the initial amount of foreign capital as well as the rate of corporation tax on foreign capital.

Urban Unemployment, Factor Accumulation, and Welfare

This paper shows that, contrary to the conventional wisdom, economic expansion (factor accumulation) may be immiserizing in the mobile capital Harris-Todaro model if scarcity of land is introduced in agricultural production. The effect of factor accumulation on the level of unemployment is examined, and precise conditions for the expected response are derived. Copyright 1998 by Blackwell Publishing Ltd

Urban unemployment, informal sector and development policies

We analyze the effects of wage subsidy policies on unemployment and welfare in the model that is characterized by the existence of both open unemployment and the informal sector that producesfinal goods. Our main findings are as follows. Wage subsidies to the agricultural and informal sectors increase welfare and decrease urban unemployment. The effects of a wage subsidy to manufacturing sector on welfare and unemployment are conditional. We identify some sufficient conditions for the definite results and interpret them.

Export Processing Zones, Backward Linkages, and Variable Returns to Scale

This paper investigates the effects of forming export processing zones on factor rewards, national income, and the intermediate-good-producing sector under variable returns to scale (VRS). It is shown that the results obtained in the model under constant returns to scale are substantially modified if VRS is incorporated into the model. Copyright 2000 by Blackwell Publishing Ltd

Equity Control of Multinational Firms: Effects on Resource Allocation and National Welfare

In this paper, we re-examine the effects of equity control of multinational firms on resource allocation and national welfare in a model with rural–urban migration and urban unemployment. A large number of recipient (host) countries are developing countries with dual economies. We indicate, among other things, that a restriction on multinational investment may lower the unemployment rate and increase the total employment in the host country. Furthermore, we find that the restriction on multinational investment raises the national welfare in the host economy if the tariff imposed on imports is sufficiently large and the difference between domestic and foreign capital rental is sufficiently small.

Local content requirements and urban unemployment

Abstract Local content requirements (LCRs) are extensively employed in many developing countries that intend to develop the domestic intermediate good sectors as well as the final good sectors. This article investigates the effects of LCRs on the domestic intermediate-good-producing sector, urban unemployment, and welfare.