On the shadow wage of urban jobs in less-developed countries

Eliakim Katz*, Oded Stark

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


This paper examines the relationship between the social opportunity cost associated with the creation of an urban job, i.e., the shadow wage, and the market wage, taking into consideration induced rural-to-urban migration. We suggest that the shadow wage is lower than the market wage: first, when agents are risk averse and second, even if they are risk neutral but their contemporaneous consumption function is concave and the social value of savings exceeds the social value of consumption, as is likely to be the case in less-developed countries.

Original languageEnglish
Pages (from-to)121-127
Number of pages7
JournalJournal of Urban Economics
Issue number2
StatePublished - Sep 1986
Externally publishedYes


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