URBAN UNEMPLOYMENT AND DEVELOPMENT POLICY: THE INTRODUCTION OF AN

This work explicitly introduces the government activity to collect and transfer unemployment allowances into the Harris-Todaro model. It examines both the effectiveness of various policy tools and the effect this activity has on welfare. The findings with certain qualifications are that the Harris-Todaro policy prescriptions hold, even if we allow for the resource-using activity to resolve the unemployment problem. Furthermore, an increase in the level of such an activity may improve welfare. Copyright 1996 Blackwell Publishers Ltd..