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ECONOMIC INCENTIVES FOR AN URBAN BIAS IN DEVELOPMENT POLICIES *
Author(s) -
Gruver Gene W.,
Zeager Lester A.
Publication year - 1990
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.1467-8586.1990.tb00291.x
Subject(s) - incentive , economics , utility maximization , labour economics , turnover , labor mobility , urban economics , microeconomics , management , mathematical economics
This paper presents a labor turnover model in which urban employers have an economic incentive to support an urban bias in development policies because of the indirect effect of rural incomes on urban training expenditures through the rate of labor turnover. A comparative static analysis of the model shows that an income transfer from rural workers to urban workers increases the profits of urban employers, even if urban employers are not directly involved in the transfer. Unlike previous versions of the labor turnover model, worker behavior is explicitly grounded in utility maximization.