This paper considers trade policies and welfare in a Harris-Todaro model with risk averse workers. Workers are assumed to have identical and homothetic preferences, but their incomes differ, depending on whether and where they are employed. When workers are equally weighted, maximizing social...

This paper integrates the decision making of a firm facing production uncertainty into the theory of aggregate supply. This integration has two important policy implications. First, if the aggregate demand is not unitary price elastic, the presence of uncertainty reduces the aggregate supply,...