USAID DEC
Shadow wage rate in developing countries; Little and Hirrlees" formulation reconsidered
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Shadow wage rate in developing countries; Little and Hirrlees" formulation reconsidered
The report discussed the socially optimal shadow wage rate for use in planning and evaluating government investment projects when, as is generally the case in developing countries, industrial wage rates are several times greater than the marginal product of labor in agriculture.
Warr, Peter · 1970
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Abstract
The paper derives a shadow wage from an explicit optimization model and shows that the Little-Mirrlees formula is based on very restrictive assumptions about the propensities to save of different social groups.
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