Abstract
It is typically assumed in growth theory that workers have no preferences between various occupations available in the economy. The present paper analyses the effects of wage differentials in fixed coefficient models which Ocker has recently investigated [14]. The wage differentials may be due to worker preferences between jobs (Manning [12]). Much attention has recently been given to a simple factor market distortion in two-sector models; as a wage differential, this factor market distortion takes the form that the wage in one sector is a constant multiple of the wage in the other sector.' However, it is more reasonable to believe that the wage differential between sectors depends on the actual allocation of labour since increasing resistance must be overcome to get extra workers into an industry as the numbers already there increase. One form of such a generalized wage differential, or factor market distortion, is that considered in the context of wages policy by Lancaster [9], Pitchford [15], and Manning, Richardson & Webb [13]. This is
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