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Environment, Urban Unemployment, and Tariffs in the Harris–Todaro Model

Review of Development Economics

Published online on

Abstract

By incorporating the environment into the Harris–Todaro model, this paper examines how introduction of an import tariff on manufactured goods affects urban unemployment and the environment in a less‐developed country. In the Harris–Todaro model, introduction of an import tariff increases urban unemployment when there is no environmental pollution. In contrast, this paper shows that introduction of a tariff may decrease unemployment if the environment is incorporated into the model. Moreover, it is shown that introduction of a tariff improves the environment.