This paper develops a theoretical model like Gupta's to show the simultaneous existence of the urban informal sector and open unemployment in the urban sector in a Harris-Todaro type of model of rural-urban migration. A wage or a price subsidy policy to the rural sector, or a demand management policy like an export promotional scheme in the manufacturing sector, reduces the urban unemployment level, and provides a theoretical basis for the introduction of export promotional measures like the formation of duty-free Export Processing Zones (EPZs) to solve the urban unemployment problem. The policy conclusions of the present paper are different from those found in Gupta's 1993 model.

SARBAJIT CHOWDHURY

Economics

University of Calcutta (informally known as Calcutta University or CU) is a collegiate public state university located in Kolkata, West Bengal, India.&nbsp;Within India it is recognized as a &quot;Five-Star University&quot; and accredited &quot;A&quot; Grade by National Assessment and Accreditation Council.

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The University of Calcutta has secured the Fifth position among the Universities of India in the prestigious &quot;Indian University Ranking 2019&quot; list, released by the NIRF of the Ministry of Human Resource Development, Government of India.

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It was established on 24 January 1857, and was one of the first institutions in Asia to be established as a multidisciplinary and Western-style university. Its alumni and faculty include several heads of state, heads of government, social reformers, prominent artists, only academy award winner and Dirac medal winner in India, many Fellows of the Royal Society and five Nobel laureates as of 2019 which is highest in South Asia.

University Of Calcutta

Rural–Urban Migration, the Informal Sector, Urban Unemployment, and Development Policies: A Theoretical Analysis

Review of Development Economics

The paper develops a three-sector full-employment general equilibrium model for a small open developing economy with exogenous labour market imperfection and a non-traded sector providing healthcare services, the consumption of which generates positive externalities. Our main objective is to show that the optimal consumption subsidy to healthcare, if solely judged from the standpoint of economic growth, is strictly positive (zero) when the production technology of the healthcare sector is of the variable (fixed) coefficient type. However, in the variable coefficient case, the optimal per capita expenditure on healthcare crucially hinges on the degree of labour market imperfection and the quality of services provided by the healthcare sector. The latter result can possibly be considered as a theoretical justification why the magnitude of per capita public spending on healthcare services is significantly lower in the developing countries compared to that in the developed nations. Besides, using the Sen's (1974) index of social welfare that takes into consideration both the growth and income inequality aspects, we have proved that the optimal health subsidy is positive irrespective of the nature of production technology of the healthcare sector. Furthermore, most of these results are found to be valid even in the presence of Harris-Todaro type unemployment. Finally, the results lead to a few important policy implications in the context of the developing countries. © 2017 Elsevier Ltd

Economic Modelling

Subsidizing healthcare in the presence of market distortions

In development literature Foreign Direct Investment (FDI) is traditionally considered to be instrumental for the economic growth of all countries, particularly the developing ones. It acts as a panacea for breaking out of the vicious circle of low savings/low income and facilitates the import of capital goods and advanced technical knowhow. This book delves into the complex interaction of FDI with diverse factors. While FDI affects the efficiency of domestic producers through technological diffusion and spill-over effects, it also impinges on the labor market, affecting unemployment levels, human capital formation, wages (and wage inequality) and poverty; furthermore, it has important implications for socio-economic issues such as child labor, agricultural disputes over Special Economic Zones (SEZ) and environmental pollution. The empirical evidence with regard to most of the effects of FDI is highly mixed and reflects the fact that there are a number of mechanisms involved that interact with each other to produce opposing results. The book highlights the theoretical underpinnings behind the inherent contradictions and shows that the final outcome depends on a number of country-specific factors such as the nature of non-traded goods, factor endowments, technological and institutional factors. Thus, though not exhaustive, the book integrates FDI within most of the existing economic systems in order to define its much-debated role in developing economies. A theoretical analysis of the different facets of FDI as proposed in the book is thus indispensable, especially for the formulation of appropriate policies for foreign capital. © Springer India 2014. All rights are reserved.

Foreign Direct Investment in Developing Countries: A Theoretical Evaluation

Foreign direct investment in developing countries: A theoretical evaluation

The paper develops a three-sector, specific factor, general equilibrium model with two high-skill sectors and unemployment of skilled labor. One of the two high-skill sectors produces a non-traded commodity whose aggregate demand consists of both domestic demand and an exogenously given foreign demand. The consequences of a decline in the foreign demand for the non-traded good resulting from worldwide economic recession on the skilled and unskilled labor markets in a developing economy have been examined. The analysis finds that the effects on the labor markets crucially hinge on the relative factor intensities of the two high-skill sectors and that through the adoption of appropriate fiscal measures; the country can shield its workforce from the rage of global economic downturn. © 2011 Elsevier B.V.

Economic recession, skilled unemployment and welfare

The paper is purported to examine the consequences of possible labor market reform in the developing economies on the incidence of child labor and economic well-being of the child labor supplying families. A two-sector, full-employment general equilibrium structure with child labor and imperfection in the market for adult labor has been used for the analytical purpose. Although this policy is likely to lower the incidence of child labor the welfare of the families supplying child labor worsens. The paper, therefore, questions the desirability of a policy designed at mitigating the child labor problem especially when it makes the poor families worse off. © 2011 Elsevier B.V.

Labor market reform and incidence of child labor in a developing economy

The last 50 years have seen unprecedented population growth and urbanization, particularly in developing countries. However, economic development in these countries has failed to generate adequate employment and income opportunities in the modern sector. This imbalance has compelled the surplus labor force to generate its own means of employment and survival in the informal sector. The informal sector is economic activity that is neither taxed nor monitored by a government. Its main characteristics are: easy entry for new enterprises, reliance on indigenous resources, family ownership of enterprises, small scale operations and low productivity, labor-intensive and adapted technology, reliance of workers on informal sources of education and skills, unregulated and competitive markets and lack of governmental support. This timely, comprehensive book provides insight into the diverse aspects of the informal sector, its role in the context of unemployment, child labor, globalization and environment, as well as its multi-faceted interaction with the other sectors of the economy. It outlines previous doctrines that portray the informal sector as a sector of last resort, and elucidates newer approaches that see the informal sector as dynamic and instrumental in ameliorating unemployment and propelling the developing economies towards growth and prosperity. Finally, the book critically reviews the contradictions within both to trace the nature and direction of desirable policy parameters. It is an invaluable reference for academics and students in development and international economics. The book's findings will also be useful to policymakers for application to development projects. © Springer Science+Business Media, LLC 2010 All rights reserved.

Journal	Review of Development Economics
Publisher	Blackwell Publishing Ltd
ISSN	1363-6669