The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Labour Surplus Economies

  • Gustav Ranis
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1044

Abstract

In some sectors with a large endowment of unskilled labour and without sufficient cooperating land or capital, given technology and a wage level bounded from below, labour markets cannot clear. A full employment solution would drive remuneration below socially acceptable, possibly subsistence, levels of consumption. Consequently, a labour surplus exists in that much of the labour force contributes less to output than it requires: its marginal product falls below its remuneration, set by bargaining. A reallocation of such workers to other, competitive, sectors would eliminate the inefficiency and enhance total output. Open economy dimensions, extensions and critiques are dealt with.

Keywords

Agriculture and economic development Arrow, K. Balanced growth Becker, G. Behavioural economics Dual economies Engel’s Law Family networks Informal sector Kuznets, S. Labour surplus Marginal productivity Minimum subsistence level of existence (MSL) Neoclassical economics Population growth Agricultural vs non-agricultural productivity Sen, A. Solidarity networks 
This is a preview of subscription content, log in to check access

Bibliography

  1. Arrow, K. 1988. General economic theory and the emergence of theories of economic development. Presidential address, 8th World Economic Congress of the International Economic Association. New Delhi, 1986.Google Scholar
  2. Fafchamps, M. 1992. Solidarity networks in preindustrial societies: Rational peasants with a moral economy. Economic Development and Cultural Change 41: 147–174.CrossRefGoogle Scholar
  3. Fei, J., and G. Ranis. 1964. Development of the labor surplus economy: Theory and policy. Homewood: Richard A. Irwin, Inc.Google Scholar
  4. Geertz, C. 1963. Agricultural involution: The process of ecological change in Indonesia. Berkeley: University of California Press.Google Scholar
  5. Hayami, Y., and M. Kikuchi. 1982. Asian village economy at the crossroads. Baltimore: Johns Hopkins University Press.Google Scholar
  6. Hayami, Y., and V. Ruttan. 1970. Korean rice, Taiwan rice, and Japanese agricultural stagnation: An economic consequence of colonialism. Quarterly Journal of Economics 84: 562–589.CrossRefGoogle Scholar
  7. Ishikawa, S. 1975. Peasant families and the agrarian community in the process of economic development. In Agriculture in development theory, ed. L. Reynolds. New Haven: Yale University Press.Google Scholar
  8. Kuznets, S. 1966. Modern economic growth: Rate, structure and spread. New Haven: Yale University Press.Google Scholar
  9. Lewis, W. 1972. Reflections on unlimited labor. In International economics and development: Essays in honor of Raul Prebisch, ed. L. DiMarco. New York: Academic Press.Google Scholar
  10. Nurkse, R. 1953. Problems of capital formation in underdeveloped countries. New York: Oxford University Press.Google Scholar
  11. Ohkawa, K. 1972. Differential structure and agriculture: Essays on dualistic growth. Tokyo: Kinokuniya.Google Scholar
  12. Osmani, S.R. 1991. Wage determination in rural labor markets: The theory of implicit cooperation. Journal of Development 34: 3–23.Google Scholar
  13. Rosenstein-Rodan, P. 1943. The problem of industrialization of eastern and south-eastern Europe. Economic Journal 53: 202–211.CrossRefGoogle Scholar
  14. Rosenzweig, M. 1988. Labor markets in low income countries. In Handbook of development economics, ed. H. Chenery and T.N. Srinivasan, vol. 1. Amsterdam: North Holland.Google Scholar
  15. Schultz, T. 1964. Transforming traditional agriculture. New Haven: Yale University Press.Google Scholar
  16. Scott, J.C. 1976. The moral economy of the peasant. New Haven: Yale University Press.Google Scholar
  17. Sen, A. 1967. Surplus labor in India: A critique of Schultz’ statistical test. Economic Journal 77: 154–161.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Gustav Ranis
    • 1
  1. 1.