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The paper addresses the question of optimal development of a developing economy. The framework presented, it is believed, can be of help in thinking about policies relating, inter alia, to population growth, inter-sectoral migration, agriculture-industry relationship, wages in different sectors, and income distribution in an inter-connected way in the context of optimal development of an economy with an informal sector.

This paper provides a test—using an India data set—of both the Todaro-type probabilistic models of migration and a distinctly different view of the labour migration process which sees the rural–urban migration flow as consisting of two distinct streams, with separate incentives—one group migrating to the informal sector where wages are competitively determined and the other group to the formal sector with jobs mostly prearranged (and with rural–urban migration not contributing to an increase in unemployment in any meaningful sense). The policy implications of this alternative view of the labour migration process are clearly substantially different from those derived from the Todaro and the Harris–Todaro-type models. The evidence presented in this paper are seen to support this alternative view. The paper also considers the role of the social factors in migration decisions and examines the extent to which the variables which explain the migration for employment also explain the migration behaviour of those who gave various reasons other than employment for migration. Copyright © 2002 John Wiley & Sons, Ltd.

This paper first sets out a model of a less developed country (LDC), then shows how, with minor modifications, this model can be changed to become a model of a developed country (DC) consisting of a primary and a secondary sector. Open economy features are then introduced into both the DC and LDC models. The aim is to highlight the role of the Informal sector in both developed and less developed countries and show how changes in the world economy might impinge on the Informal sector in our DC and LDC differently. It is also hoped that the development of different models in the paper may be of some pedagogical use.

This paper introduces dynamics and migration into a three-sector general equilibrium model of LDC which systematically incorporates an Informal sector and provides a framework alternative to the Harris–Todaro-type framework. The results of the paper underscore the dynamic nature of the Informal sector and suggest that the ranking of policies to improve welfare would be considerably different in this model compared to those in the Harris–Todaro-type models. It is also argued that the framework developed here can be extended to explore a number of other issues in the context of development. Copyright © 1998 John Wiley & Sons, Ltd.

This note sketches out the likely effects of a wage subsidy in a model of LDC which systematically incorporates an Informal sector. It is seen that the effects of a wage subsidy in this model differ considerably from those derived in the Harris‐Todaro‐type frameworks. Also, the ranking policies to improve welfare is likely to be considerably different in this model compared to this in the Harris‐Todaro‐type models.

The aim of this paper is to highlight the role of the informal sector in the Indian economy. The paper notes that in occupational distribution in India, particularly during the 1970s, it is the informal sector (I-sector) which accounted for most of the increase in non-agricultural employment and that this growth of I-sector employment occurred not only in activities traditionally thought to be associated with the I-sector expansion (such as trade, construction and services) but also importantly in manufacturing, and there is a strong presumption that the manufacturing segment of the informal sector expanded faster than its services segment. Evidence further suggests that the I-sector was not a passive absorber of labour but a dynamic sector responding successfully to changing demand in the economy and contributing significantly to income and output. The paper also offers a hypothesis that, simultaneously with these changes in economic structure, there is likely to have occurred a change in the composition of rural-urban migrants with the share of those who go to the informal sector and have only informal sector jobs as their targets (usually members of the poorer households in the rural areas) increasing and that of those who go to the formal sector (usually well-educated members of the relatively well-to-do land-owning families in the rural areas) declining; further, migration by the members of the poorer rural households is likely to have increased not because their rural income declined but because the informal sector income increased.

This paper develops a model of LDC that systematically incorporates an informal sector. The implications of the model presented in this paper, in particular, are seen to be directly opposed to the fundamental implications of the Lewis-type models. The model also questions the conventional wisdom that decreases in the formal-sector minimum wage and increases in the maximum size of firm above which this minimum is enforced will help workers in the informal sector, the essential argument being that these policies may have adverse terms-of-trade effects on the informal sector that offset their favorable labor-market effects. Copyright 1994 by Scottish Economic Society.

This paper provides a review of the theoretical literature on rural–urban migration in contemporary LDCs. The paper begins with a brief discussion of the Lewis model before going on to discuss the Todaro and the Harris–Todaro models and the large literature which these models have spawned. The question of job search in the context of migration and the role of family members in migration decisions are considered next. The paper then takes a closer look at the Informal sector and also sets out alternative migration functions to the ones usually employed in the literature. The paper concludes with a brief note on some of the important implications arising from our study.