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Foreign Capital, Unemployment, Worker's Efficiency and Fair Wage

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  • Manash Ranjan Gupta

    (Jadavpur University)

Abstract

A Two sector fair wage model has been considered. It is shown that an exogenous inflow of foreign capital has no effect on unemployment; and the Brecher-Alejandro(1977) proposition remains valid in its original form when the efficiency function is similar to that of Aell and Lundbrg (1992, 1995). However, results may be different in the following cases: (i) the efficiency depends negatively on the ratio of foreign capital to domestic capital; (ii) there is intersectoral distortion in the capital market; (iii) one of the two sectors produces an unhealthy good and worsens efficiency; and (iv) the foreign capital inflow leads to technological advancement in the economy.

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Bibliographic Info

Article provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.

Volume (Year): 34 (1999)
Issue (Month): 1 (January)
Pages: 73-87

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Handle: RePEc:dse:indecr:v:34:y:1999:i:1:p:73-87

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Cited by:
  1. Chaudhuri, Sarbajit, 2007. "Foreign capital, welfare and urban unemployment in the presence of agricultural dualism," Japan and the World Economy, Elsevier, Elsevier, vol. 19(2), pages 149-165, March.

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