IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v156y2026ics0264999326000155.html

Asymmetric wage and employment dynamics in segmented labour markets

Author

Listed:
  • Murali, Srinivasan
  • Naresh, Abhishek
  • Shin, Jong Kook
  • Subramanian, Chetan

Abstract

Using data from the Indian Annual Survey of Industries, we document that regular workers exhibit asymmetric wage and employment dynamics, while contract workers display asymmetric employment but symmetric wage dynamics. Specifically, (i) the nominal wage growth of regular workers is positively skewed, while that of contract workers is nearly symmetric, and (ii) employment growth for both groups is negatively skewed, with contract employment being less negatively skewed than regular. To account for these patterns, we extend a workhorse business cycle model with asymmetric wage adjustment costs for regular labour and symmetric wage adjustment costs for contract labour, along with symmetric labour adjustment costs for the regular sector. Our calibrated model shows that the presence of contract labour relaxes the constraint imposed by downward nominal wage rigidity, thereby reducing the optimal grease inflation towards zero.

Suggested Citation

  • Murali, Srinivasan & Naresh, Abhishek & Shin, Jong Kook & Subramanian, Chetan, 2026. "Asymmetric wage and employment dynamics in segmented labour markets," Economic Modelling, Elsevier, vol. 156(C).
    • Handle: RePEc:eee:ecmode:v:156:y:2026:i:c:s0264999326000155
    DOI: 10.1016/j.econmod.2026.107486
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999326000155
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2026.107486?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:156:y:2026:i:c:s0264999326000155. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.