The Traditional Industrial Sector in Developing Countries: An Update on Its Role and Functioning

Abstract. In the theory of urban labor markets in less developed countries, levels of traditional industrial sector incomes, are a key determinant of modern sector skilled wages (directly through the external labor market) and unskilled wages (indirectly through operations of internal labor markets). Data on traditional sector incomes for 40 urban areas are assembled from a variety of sources; the quality of these data and needs for future data collection are critically appraised. The data are then used to conduct a preliminary test of the labor market model. In general, the predictions of the model are supported by these tests