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The Analytics of Segmented Labor Markets

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Author Info
P R Agénor

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Abstract

This paper provides an analytical overview of models of segmented urban labor markets in developing countries. It begins by reviewing the characteristics of the labor market in these countries, including institutions and regulations that may lead to segmentation. The wage and employment e?ects of imperfect labor mobility between the formal and informal sectors are then illustrated with a simple graphical analysis. Formal models of urban wage formation are discussed next, and a two-sector shirking model with segmented urban labor markets is presented. The model is used to analyze the impact of an increase in the minimum wage on unskilled unemployment.

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File URL: http://www.socialsciences.manchester.ac.uk/cgbcr/dpcgbcr/dpcgbcr52.pdf
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Paper provided by Economics, The Univeristy of Manchester in its series Centre for Growth and Business Cycle Research Discussion Paper Series with number 52.

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Length: 87 pages
Date of creation: 2005
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Handle: RePEc:man:cgbcrp:52

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  1. Mathan Satchi & Jonathan Temple, 2006. "Growth and labour markets in developing countries," Bristol Economics Discussion Papers 06/581, Department of Economics, University of Bristol, UK. [Downloadable!]
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  2. David Cook & Hiromi Nosaka, 2005. "Dual labor markets and business cycles," Working Paper Series 2006-36, Federal Reserve Bank of San Francisco. [Downloadable!]
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  3. Carmen Pagés & Marco Stampini, 2007. "No Education, No Good Jobs? Evidence on the Relationship between Education and Labor Market Segmentation," IZA Discussion Papers 3187, Institute for the Study of Labor (IZA). [Downloadable!]
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