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Foreign Capital Inflow, Skilled-Unskilled Wage Inequality and Unemployment of Unskilled Labour in a Fair Wage Model

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  • Chaudhuri, Sarbajit
  • Banerjee, Dibyendu

Abstract

This 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 Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18004.

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Date of creation: 15 Aug 2009
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Handle: RePEc:pra:mprapa:18004

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Keywords: Fair wage hypothesis; skilled labour; unskilled labour; wage inequality; foreign capital; unemployment;

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References

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Citations

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Cited by:
  1. Pan, Lijun & Zhou, Yu, 2013. "International factor mobility, environmental pollution and skilled–unskilled wage inequality in developing countries," Economic Modelling, Elsevier, Elsevier, vol. 33(C), pages 826-831.
  2. Dwibedi, Jayanta & Chaudhuri, Sarbajit, 2011. "Poverty alleviation programs, FDI-led growth and child labour under agricultural dualism," MPRA Paper 29997, University Library of Munich, Germany.
  3. Pi, Jiancai & Zhou, Yu & Yin, Jun, 2013. "International factor mobility, monopolistic competition, and wage inequality," Economic Modelling, Elsevier, Elsevier, vol. 33(C), pages 326-332.
  4. Anwar, Sajid & Sun, Sizhong, 2012. "Trade liberalisation, market competition and wage inequality in China's manufacturing sector," Economic Modelling, Elsevier, Elsevier, vol. 29(4), pages 1268-1277.
  5. Gupta, Manash Ranjan & Dutta, Priya Brata, 2010. "Skilled-unskilled wage inequality, nontraded good and endogenous supply of skilled labour: A theoretical analysis," Economic Modelling, Elsevier, Elsevier, vol. 27(5), pages 923-934, September.
  6. Chaudhuri, Sarbajit, 2009. "Labour Market Reform and Incidence of Child Labour in a Developing Economy," MPRA Paper 19667, University Library of Munich, Germany.
  7. Chaudhuri, Sarbajit & Ghosh Dastidar, Krishnendu, 2014. "Corruption, efficiency wage and union leadership," MPRA Paper 57050, University Library of Munich, Germany.
  8. Chaudhuri, Sarbajit, 2011. "Economic recession, skilled unemployment and welfare," Economic Modelling, Elsevier, Elsevier, vol. 28(3), pages 1435-1440, May.
  9. Li, Xiaochun & Xu, Yuanting & Wang, Dianshuang, 2014. "Environment and labor movement of skilled labor and unskilled labor between sectors," Economic Modelling, Elsevier, Elsevier, vol. 38(C), pages 367-371.
  10. Gupta, Manash Ranjan & Dutta, Priya Brata, 2011. "Skilled-unskilled wage inequality and unemployment: A general equilibrium analysis," Economic Modelling, Elsevier, Elsevier, vol. 28(4), pages 1977-1983, July.
  11. Chaudhuri, Sarbajit, 2010. "Economic recession, demand constraint and labour markets in a developing economy," MPRA Paper 27433, University Library of Munich, Germany.

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