This paper analyses optimal tax policies in a two-sector model of an LDC, similar to that of Harris and Todaro [1970], The analysis assumes a small, open economy with a non-competitive urban wage which depends on prices of both agricultural and manufactured goods. Optimal policies are considered for cases where an employment subsidy in manufacturing and/or taxes on international trade are the only feasible instruments, and where government revenue has an excess burden. Comparisons are made with results obtained by Harris and Todaro, Hagen, and Bhagwati and Srinivasan, for similar models.

Additional Metadata
Persistent URL dx.doi.org/10.1080/00220387908421711
Journal Journal of Development Studies
Citation
Blomqvist, Å. (1979). Urban Unemployment and Optimal Tax Policy in a Small, Open Dual Economy. Journal of Development Studies, 15(2), 147–164. doi:10.1080/00220387908421711