Urban unemployment, foreign capital, and policy intervention

Abstract

We re-examine the effect of various policy interventions in a developing economy with urban unemployment of the Harris-Todaro type. Our innovations include the introduction of international capital mobility, and the explicit consideration of capital taxes (subsidies). Our findings are compared and contrasted with the Harris-Todaro models with and without intersectoral capital mobility. The introduction of international capital mobility returns the analysis toward the original sector-specific capital Harris-Todaro model, since in both models the manufacturing sector forms a totally independent sub-economy. [F13, F20]. © 1994, Taylor & Francis Group, LLC. All rights reserved.