The Trial for the evaluation of the Todaro or Lewis theses on data of the economy of Algeria

Abstract

This paper tries to evaluate the effect of the extension of the activities in urban area, in particular tertiary sector, on the variation of unemployment rate in Algeria. Referring to the model developed by Cahuc P. and Célimène F. (1993), we estimate the degree of influence of the externalities induced by the inter-sectoral rotation of the labor force on labor productivity and its effect on the unemployment rate (Todaro or Lewis thesis). Estimation by the LS method of data from Algeria showed increasing returns to scale in the tertiary sector (μ1 = + 0.929) and decreasing in the agricultural sector (μ2 = -1.991). The value of the elasticity coefficient of the unemployment shows a negative number of - 2.121. This result indicates that the creation of urban employment has led to a drop in the unemployment rate, which confirms Lewis’s thesis.