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Fair wages, urban unemployment and welfare in a developing economy

Beladi, Hamid, Chao, Chi-Chur and Hollas, Daniel 2011, Fair wages, urban unemployment and welfare in a developing economy, Economics bulletin, vol. 31, no. 1, pp. 273-285.

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Title Fair wages, urban unemployment and welfare in a developing economy
Author(s) Beladi, Hamid
Chao, Chi-ChurORCID iD for Chao, Chi-Chur orcid.org/0000-0002-1056-469X
Hollas, Daniel
Journal name Economics bulletin
Volume number 31
Issue number 1
Start page 273
End page 285
Total pages 13
Publisher Economics Bulletin
Place of publication [Nashville, Tenn.]
Publication date 2011-01-11
ISSN 1545-2921
Keyword(s) Fair wage
Wage inequality
Urban unemployment
Welfare
Summary This paper studies the impact of pay fairness on factor income and social welfare in a developing economy with both modern urban and traditional rural sectors. When urban workers become aware of income fairness, they use the expected urban wage and weighted average returns to capitalists as their reference pay. This perception of fairness raises the urban wage and enlarges the wage gap between the urban and rural sectors. The ensuing above market-clearing wage rate causes urban unemployment. Greater wage fairness worsens urban unemployment and lowers social welfare in the economy.
Language eng
Field of Research 14 Economics
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2011, The Authors
Free to Read? Yes
Persistent URL http://hdl.handle.net/10536/DRO/DU:30099621

Document type: Journal Article
Collections: Faculty of Business and Law
Open Access Collection
Department of Economics
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