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Globalization, Labour Market Segmentation, Unemployment and Wage Inequality: A Theoretical Analysis


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  • Banerjee, Rakhi

    (Gurudas College, Kolkata)

  • Narayan Nag, Ranjanendra

    (St. Xavier’s College)

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    In this paper we build up a three-sector general equilibrium framework to examine impact of agricultural trade liberalization, tariff rate restructuring and inflow of Foreign Direct Investment on unemployment and wage inequality in an emerging market economy. The paper shows that agricultural trade liberalization and tariff rate restructuring reduces the skilled-unskilled wage gap whereas increase in inflow of foreign capital may lead to worsening of income distribution. Multiple cross effects, factor specificity and factor intensity ranking play important roles in determining changes in output composition, factor rewards and unemployment in the wake of economic reforms.

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    Bibliographic Info

    Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

    Volume (Year): 26 (2011)
    Issue (Month): ()
    Pages: 578-599

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    Handle: RePEc:ris:integr:0550

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    Related research

    Keywords: Economic Reforms; Efficiency Wage and Unemployment;

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