The shadow wage in the urban sector is evaluated in a Harris-Todaro type of model using Sen's welfare measure that incorporates inequality in income in the welfare function. It appears that the shadow wage lies above the market wage when the urban sector is underdeveloped. Copyright 1988 by...

This paper develops a model based on the "consumption efficiency" hypothesis of H. Leibenstein (1957) and shows the following: (1) it is profitable for the employer to pay the workers a combination of cash and meals, rather than to pay only in cash, when the workers have dependants; (2) the...