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Growth and labour markets in developing countries

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  • Mathan Satchi
  • Jonathan Temple

Abstract

In middle-income countries, the informal sector often accounts for a substantial fraction of urban employment. We develop a general equilibrium model with matching frictions in the urban labour market, the possibility of self-employment in the informal sector, and scope for rural-urban migration. We investigate the effects of different types of growth on wages and the informal sector, and the extent to which labour market institutions can influence aggregate productivity. We quantify these effects by calibrating the model to data for Mexico, a country with a sizeable informal sector and significant labour market rigidities.

Suggested Citation

  • Mathan Satchi & Jonathan Temple, 2006. "Growth and labour markets in developing countries," Bristol Economics Discussion Papers 06/581, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:06/581
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    Cited by:

    1. James Albrecht & Lucas Navarro & Susan Vroman, 2009. "The Effects of Labour Market Policies in an Economy with an Informal Sector," Economic Journal, Royal Economic Society, vol. 119(539), pages 1105-1129, July.
    2. Eme A. Dada, 2018. "Jobless Growth in Nigeria: Determining Employment Intensive Sectors," Journal of African Development, African Finance and Economic Association (AFEA), vol. 20(2), pages 69-79.
    3. Manoel Bittencourt, 2007. "Macroeconomic Performance and Inequality: Brazil 1983-1994," Ibero America Institute for Econ. Research (IAI) Discussion Papers 163, Ibero-America Institute for Economic Research.
    4. Mariano Bosch, 2006. "Job Creation and Job Destruction in the Presence of Informal Labour Markets," CEP Discussion Papers dp0761, Centre for Economic Performance, LSE.
    5. Gutierrez, Catalina & Orecchia, Carlo & Paci, Pierella & Serneels, Pieter, 2007. "Does employment generation really matter for poverty reduction ?," Policy Research Working Paper Series 4432, The World Bank.
    6. Mathan Satchi & Jonathan Temple, 2006. "Growth and labour markets in developing countries," CEDI Discussion Paper Series 06-12, Centre for Economic Development and Institutions(CEDI), Brunel University.
    7. Mathan Satchi & Jonathan Temple, 2009. "Labor Markets and Productivity in Developing Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 183-204, January.
    8. International Labour Office & International Institute for Labour Studies, 2011. "Brazil : an innovative income-led strategy," Studies on Growth with Equity 463478, International Labour Office, Research Department.
    9. Nabamita Dutta & Deepraj Mukherjee, 2018. "Can financial development enhance transparency?," Economic Change and Restructuring, Springer, vol. 51(4), pages 279-302, November.
    10. Zenou, Yves, 2008. "Job search and mobility in developing countries. Theory and policy implications," Journal of Development Economics, Elsevier, vol. 86(2), pages 336-355, June.
    11. Abdul–Wadood Moomen & Ashraf Dewan, 2017. "Probing the Perspectives of Stakeholder Engagement and Resistance Against Large‐Scale Surface Mining in Developing Countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(2), pages 85-95, March.
    12. Bernard Boureille & Yacine Belarbi & Abdallah Zouache, 2007. "Regional Employement Growth and Spatial Dependencies in Algeria (1998-2005)," Post-Print ujm-00163347, HAL.
    13. Gaetano Lisi & Maurizio Pugno, 2011. "Tax Morale, Entrepreneurship, and the Irregular Economy," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 5(2), pages 116-131, August.
    14. Mathan Satchi & Jonathan Temple, 2009. "Labor Markets and Productivity in Developing Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 183-204, January.
    15. Catalina Gutierrez & Pierella Paci & Marco Ranzani, 2008. "Making Work Pay in Nicaragua : Employment, Growth, and Poverty Reduction," World Bank Publications - Books, The World Bank Group, number 6472, December.
    16. International Labour Office. & International Institute for Labour Studies., 2011. "Brazil : an innovative income-led strategy," Studies on Growth with Equity, International Labour Office, Research Department, number 994634783402676, April.

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    More about this item

    Keywords

    informal sector; urban unemployment; dual economies; matching frictions;
    All these keywords.

    JEL classification:

    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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