Foreign capital inflow, skilled-unskilled wage inequality and unemployment of unskilled labour in a fair wage model
AbstractThis paper has developed a three-sector general equilibrium framework that explains unemployment of both skilled and unskilled labour. Unemployment of unskilled labour is of the Harris-Todaro (1970) type while unemployment of skilled labour is caused due to the validity of the FWH in the high-skill sector. There are two types of capital one of which is specific to the primary export sector while the other moves freely among the different sectors. Inflows of foreign capital of either type unambiguously improve the economic conditions of the unskilled working class. However, the effects on the skilled-unskilled wage inequality and the extent of unemployment of both types of labour crucially hinge on the properties implied by the efficiency function of the skilled workers.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 27 (2010)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/inca/30411
Fair wage hypothesis Skilled labour Unskilled labour Wage inequality Foreign capital Unemployment;
Other versions of this item:
- Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2009. "Foreign Capital Inflow, Skilled-Unskilled Wage Inequality and Unemployment of Unskilled Labour in a Fair Wage Model," MPRA Paper 18004, University Library of Munich, Germany.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
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