Job-search and FDI in a two-sector general equilibrium model
AbstractThe purpose of this paper is to extend the Fields’ (1989) multi sector job-search model by introducing international trade and capital. Two types of capital are considered: fixed capital and mobile capital. The effects of search intensity and the inflow of foreign capital on the volume and the rate of urban unemployment and on the social welfare are also examined in both of the two cases. The main finding is: more efficient on-the-job search from the rural sector raises unemployment rate when capital is mobile between the two sectors. This is counterproductive to the standard result.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 35564.
Date of creation: 15 Jul 2011
Date of revision:
Job search; foreign capital; unemployment rate; ex-post labour; ex-ante labour; general equilibrium;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- J10 - Labor and Demographic Economics - - Demographic Economics - - - General
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-03 (All new papers)
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