Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98292
Authors: 
Ranis, Gustav
Year of Publication: 
2004
Series/Report no.: 
Center Discussion Paper 900
Abstract: 
The labor surplus economy model has as its basic premise the inability of unskilled agricultural labor markets to clear in countries with high man/land ratios. In such situations, the marginal product of labor is likely to fall below a bargaining wage, related to the average rather than the marginal product. The reallocation of such disguisedly unemployed workers by means of 'balanced' intersectoral growth ultimately permits the entire economy to operate on neo-classical principles. Finally, the paper introduces open economy dimensions, indicates the existence of other labor surplus sub-sectors and briefly responds to neo-classical critiques on both theoretical and empirical grounds.
Subjects: 
Development Theory
Labor Markets
JEL: 
O10
O12
O17
Document Type: 
Working Paper

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