URBAN UNEMPLOYMENT, INTERNATIONAL LABOR MOBILITY AND WELFARE

This paper extends the Harris-Todaro model to include the possibility of international labor movement and analyze the effectiveness of some development policies, for example, wage subsidies and an import tariff . This possibility will change the conventional results that these pol icies raise the welfare from the laissez-faire level. We show that the se policies lower the welfare in terms of internal (domestic) labor, b ut they improve the welfare if foreign labor is discriminated by wage tax, exploitation or other practices.