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Economic recession, demand constraint and labour markets in a developing economy

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  • Chaudhuri, Sarbajit

Abstract

The paper develops a three-sector, specific factor, general equilibrium model with two high-skill sectors and unemployment of skilled labour. One of the two high-skill sectors produces a non-traded commodity whose aggregate demand consists of both domestic demand and an exogenously given foreign demand. The consequences of a decline in the foreign demand for the non-traded good resulting from worldwide economic recession on the skilled and unskilled labour markets in a developing economy have been examined. The analysis finds that the effects on the labour markets crucially hinge on the relative factor intensities of the two high-skill sectors and that through adoption of appropriate fiscal measures; the country can shield its workforce from the rage of global economic downturn.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27433.

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Date of creation: 12 Dec 2010
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Handle: RePEc:pra:mprapa:27433

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Keywords: Economic recession; skilled labour; unskilled labour; skilled unemployment; informal wage; Sen’s (1974) welfare measure; general equilibrium;

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References

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  1. Sarbajit Chaudhuri, 2003. "How and how far to liberalize a developing economy with informal sector and factor market distortions," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(4), pages 403-428.
  2. Chaudhuri, Sarbajit & Mukhopadhyay, Ujjaini, 2006. "Pollution and Informal Sector: A Theoretical Analysis," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 363-378.
  3. Chaudhuri, Sarbajit & Yabuuchi, Shigemi, 2010. "Formation of special economic zone, liberalized FDI policy and agricultural productivity," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 779-788, October.
  4. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2008. "Consumption efficiency hypothesis and the HOS model: Some counterintuitive results," Research in Economics, Elsevier, vol. 62(2), pages 64-71, June.
  5. Sarbajit Chaudhuri, 2005. "International Migration Of Skilled Labour, Welfare And Unemployment Of Unskilled Labour: A Note," International Trade 0511007, EconWPA.
  6. Sarbajit Chaudhuri, 2005. "Labour Market Distortion, Technology Transfer And Gainful Effects Of Foreign Capital," Manchester School, University of Manchester, vol. 73(2), pages 214-227, 03.
  7. Marjit, Sugata & Kar, Saibal & Chaudhuri, Sarbajit, 2011. "Recession in the skilled sector and implications for informal wage," Research in Economics, Elsevier, vol. 65(3), pages 158-163, September.
  8. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2010. "Foreign capital inflow, skilled-unskilled wage inequality and unemployment of unskilled labour in a fair wage model," Economic Modelling, Elsevier, vol. 27(1), pages 477-486, January.
  9. Dwibedi, Jayanta Kumar & Chaudhuri, Sarbajit, 2010. "Foreign capital, return to education and child labour," International Review of Economics & Finance, Elsevier, vol. 19(2), pages 278-286, April.
  10. Pieter Serneels, 2007. "The Nature of Unemployment among Young Men in Urban Ethiopia," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 170-186, 02.
  11. Hamid Beladi & Sarbajit Chaudhuri & Shigemi Yabuuchi, 2008. "Can International Factor Mobility Reduce Wage Inequality in a Dual Economy?," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 893-903, November.
  12. Chaudhuri, Sarbajit, 2008. "Wage inequality in a dual economy and international mobility of factors: Do factor intensities always matter?," Economic Modelling, Elsevier, vol. 25(6), pages 1155-1164, November.
  13. Chaudhuri, Sarbajit, 2008. "Fair Wage Hypothesis, Foreign Capital Inflow and Skilled-unskilled Wage Inequality in the Presence of Agricultural Dualism," MPRA Paper 9394, University Library of Munich, Germany.
  14. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2010. "FDI in agricultural land, welfare and unemployment in a developing economy," Research in Economics, Elsevier, vol. 64(4), pages 229-239, December.
  15. Sarbajit Chaudhuri, 2005. "Foreign Capital, Welfare And Urban Unemployment In The Presence Of Agricultural Dualism," International Trade 0510010, EconWPA.
  16. Sarbajit Chaudhuri & Shigemi Yabuuchi & Ujjaini Mukhopadhyay, 2006. "Inflow Of Foreign Capital And Trade Liberalization In A Model With An Informal Sector And Urban Unemployment," Pacific Economic Review, Wiley Blackwell, vol. 11(1), pages 87-103, 02.
  17. Sarbajit Chaudhuri, 2010. "Mid-Day Meal Program And Incidence Of Child Labour In A Developing Economy," The Japanese Economic Review, Japanese Economic Association, vol. 61(2), pages 252-265.
  18. Sarbajit Chaudhuri, 2005. "Tariff Structure In A Small Open Economy: A Theoretical Analysis," International Trade 0511006, EconWPA.
  19. Shigemi Yabuuchi & Sarbajit Chaudhuri, 2005. "International Migration of Labour and Skilled-Unskilled Wage Inequality," International Trade 0510007, EconWPA.
  20. Yabuuchi, Shigemi & Chaudhuri, Sarbajit, 2009. "Skill Formation, Capital Adjustment Cost and Wage Inequality," MPRA Paper 18381, University Library of Munich, Germany.
  21. Sarbajit Chaudhuri & Ujjaini Mukhopadhyay, 2002. "Economic liberalization and welfare in a model with an informal sector," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(1), pages 143-172, March.
  22. Agell, Jonas & Lundborg, Per, 1995. "Fair Wages in the Open Economy," Economica, London School of Economics and Political Science, vol. 62(247), pages 335-51, August.
  23. Sarbajit Chaudhuri & Shigemi Yabuuchi, 2005. "Economic Liberalization And Wage Inequality In The Presence Of Labour Market Imperfection," International Trade 0510008, EconWPA.
  24. Marjit, Sugata, 2003. "Economic reform and informal wage--a general equilibrium analysis," Journal of Development Economics, Elsevier, vol. 72(1), pages 371-378, October.
  25. Sarbajit Chaudhuri & Ujjaini Mukherjee, 2005. "Removal Of Protectionism, Foreign Investment And Welfare In A Model Of Informal Sector," International Trade 0511009, EconWPA.
  26. Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2010. "Skilled-Unskilled Wage Inequality And Urban Unemployment," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 997-1007, October.
  27. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2007. "Economic liberalization, capital mobility and informal wage in a small open economy: A theoretical analysis," Economic Modelling, Elsevier, vol. 24(6), pages 924-940, November.
  28. Chaudhuri, Sarbajit, 2010. "Foreign Direct Investment, Child Labour and Unemployment of Unskilled Labour in a Dual Economy," MPRA Paper 20610, University Library of Munich, Germany.
  29. Sarbajit Chaudhuri, 2005. "International Migration Of Skilled And Unskilled Labour, Welfare And Skilled-Unskilled Wage Inequality: A Simple Model," International Trade 0510011, EconWPA.
  30. Sen, Amartya, 1974. "Informational bases of alternative welfare approaches : Aggregation and income distribution," Journal of Public Economics, Elsevier, vol. 3(4), pages 387-403, November.
  31. Sarbajit Chaudhuri & Jayanta Kumar Dwibedi, 2007. "Foreign Capital Inflow, Fiscal Policies And Incidence Of Child Labour In A Developing Economy," Manchester School, University of Manchester, vol. 75(1), pages 17-46, 01.
  32. Agell, Jonas & Lundborg, Per, 1992. "Fair wages, involuntary unemployment and tax policies in the simple general equilibrium model," Journal of Public Economics, Elsevier, vol. 47(3), pages 299-320, April.
  33. Chaudhuri, Sarbajit, 2000. "Rural-Urban Migration, the Informal Sector, Urban Unemployment, and Development Policies: A Theoretical Analysis," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 353-64, October.
  34. Chaudhuri, Sarbajit & Yabuuchi, Shigemi, 2007. "Foreign Capital and Skilled-unskilled Wage Inequality in a Developing Economy with Non-traded Goods," MPRA Paper 2645, University Library of Munich, Germany.
  35. Gupta, Manash Ranjan, 1994. "Foreign capital, income inequality and welfare in a Harris-Todaro model," Journal of Development Economics, Elsevier, vol. 45(2), pages 407-414, December.
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