Employment Maximization in a Labour Surplus Economy: An Application to Bangladesh

Abstract

<p>The so called "Labour Surplus" economies represent a subset of the less developed countries of the world that have failed to overcome the Malthusian barrier of a population explosion. The economic and demographic history of this group of countries seems to indicate that in the peculiar circumstances of these countries, the traditional "GNP maximization" approach to development cannot spontaneously generate a socially acceptable rate of growth of employment. The concern, in this thesis ,. toward the allocative consequences of an "employment maximizing" development strategy arose from the massive backlog of unemployed human resources in one such labour-surplus economy, namely Bangladesh. The static and dynamic consequences £0+ resource allocation of an employment maximizing development policy are studied within the framework of a dynamic, multisectoral, linear programming planning model.</p> <p>Since an employment-oriented development strategy is likely to lower the overall growth of the economy, implying a possible conflict between employment and other social goals, a major part of the effort in this thesis is devoted to the study of the optimal patterns of allocation under alternative social goals and under alternative forms of~ecification of these goals. The conflict between the employment and the consumption objectives are explicitly brought out by using the model to generate possible trade-off paths between . these two long-run development goals. The model is also used to study the production and distributional consequences of alternative assumptions regarding labour market distortions that are reflected in wide wage-differentials between the agricultural and the non-agricultural sectors of the economy.</p>