The Role Of Competitive Forces In The Determination Of Wage Increases In Less Developed Economies:The Case Of Kenya
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Date
1975Author
House, William J
Rempel, Henry
Type
Working PaperLanguage
enMetadata
Show full item recordAbstract
The theoretical literature concerned with rural-urban migration
in LDCs has almost always assumed that the real wa~e differential between
these sectors is fixed by the institutionally determined modern sector
urban money wage and the relatively constant average product of labour in
agriculture. An equilibrium flow of migrants is then determined by the
"expectedn wage differential, defined as some function of the money wage
differential and the urban employment rate.
Little attention has been given to an empirical estimate of the
role played by the rate of unemployment in the determination of modern
sector wages in LDCs. The major hypothesis tested here is that competitive
forces are at work and that increases in the supply of labour tend to dampen
the other institutional forces that serve to increase wages in the modern
sector.
The model is tested with data for 34 districts of Kenya and the
major hypothesis is rejected
Citation
Institute of Development StudiesPublisher
University of Nairobi