IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Growth and labour markets in developing countries

  • Mathan Satchi
  • Jonathan Temple

    ()

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.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.efm.bris.ac.uk/economics/working_papers/pdffiles/dp06581.pdf
Download Restriction: no

Paper provided by Department of Economics, University of Bristol, UK in its series Bristol Economics Discussion Papers with number 06/581.

as
in new window

Length: 52 pages
Date of creation: Jan 2006
Date of revision:
Handle: RePEc:bri:uobdis:06/581
Contact details of provider: Postal: 8 Woodland Road, Bristol, BS8 1TN
Phone: 0117 928 8415
Fax: 0117 928 8577
Web page: http://www.efm.bris.ac.uk/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. MacLeod, W Bentley & Malcomson, James M, 1998. "Motivation and Markets," American Economic Review, American Economic Association, vol. 88(3), pages 388-411, June.
  2. Mazumdar, Dipak, 1976. "The urban informal sector," World Development, Elsevier, vol. 4(8), pages 655-679, August.
  3. Krebs, Tom & Maloney, William F., 1999. "Quitting and labor turnover : microeconomic evidence and macroeconomic consequences," Policy Research Working Paper Series 2068, The World Bank.
  4. Pierre-Richard Agénor, 2004. "Macroeconomic Adjustment and the Poor: Analytical Issues and Cross-Country Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 18, pages 351-408, 07.
  5. Christian Haefke & Michael Reiter, 2006. "Endogenous labor market participation and the business cycle," Economics Working Papers 950, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Satchi, Mathan & Temple, Jonathan, 2006. "Growth and Labour Markets in Developing Countries," CEPR Discussion Papers 5515, C.E.P.R. Discussion Papers.
  7. Davidson, Carl & Martin, Lawrence & Matusz, Steven, 1999. "Trade and search generated unemployment," Journal of International Economics, Elsevier, vol. 48(2), pages 271-299, August.
  8. Bosch, Mariano & Maloney, William, 2005. "Labor market dynamics in developing countries: comparative analysis using continuous time Markov processes," Policy Research Working Paper Series 3583, The World Bank.
  9. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
  10. Garey Ramey & Wouter J. den Haan & Joel Watson, 2000. "Job Destruction and Propagation of Shocks," American Economic Review, American Economic Association, vol. 90(3), pages 482-498, June.
  11. Douglas Marcouiller, S.J. & Veronica Ruiz de Castilla & Christopher Woodruff, 1995. "Formal Measures of the Informal Sector Wage Gap in Mexico, El Salvador, and Peru," Boston College Working Papers in Economics 294., Boston College Department of Economics.
  12. Lars Ljungqvist & Thomas J. Sargent, 2004. "European Unemployment and Turbulence Revisited in a Matching Model," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 456-468, 04/05.
  13. Maloney, William F., 1999. "Self-employment and labor turnover - cross-country evidence," Policy Research Working Paper Series 2102, The World Bank.
  14. Fields, Gary S, 1984. "Employment, Income Distribution and Economic Growth in Seven Small Open Economies," Economic Journal, Royal Economic Society, vol. 94(373), pages 74-83, March.
  15. Pietro Garibaldi & Etienne Wasmer, 2005. "Equilibrium Search Unemployment, Endogenous Participation and Labor Market Flows," Sciences Po publications info:hdl:2441/8921, Sciences Po.
  16. Hyeok Jeong & Robert M. Townsend, 2003. "Growth and Inequality: Model Evaluation Based on an Estimation-Calibration Strategy," IEPR Working Papers 05.10, Institute of Economic Policy Research (IEPR).
  17. Imam, M Hasan & Whalley, John, 1985. "Incidence Analysis of a Sector-specific Minimum Wage in a Two-Sector Harris-Todaro Model," The Quarterly Journal of Economics, MIT Press, vol. 100(1), pages 207-24, February.
  18. Cunningham, Wendy V. & Maloney, William F., 1998. "Heterogeneity among Mexico's micro-enterprises - an application of factor and cluster analysis," Policy Research Working Paper Series 1999, The World Bank.
  19. Bell, Linda A, 1997. "The Impact of Minimum Wages in Mexico and Colombia," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S102-35, July.
  20. Loayza, Norman A., 1997. "The economics of the informal sector : a simple model and some empirical evidence from Latin America," Policy Research Working Paper Series 1727, The World Bank.
  21. Yashiv, Eran, 2006. "Search and Matching in Macroeconomics," CEPR Discussion Papers 5459, C.E.P.R. Discussion Papers.
  22. Barbara Petrongolo & Christopher Pissarides, 2000. "Looking into the black box: a survey of the matching function," LSE Research Online Documents on Economics 2122, London School of Economics and Political Science, LSE Library.
  23. Klaus Wälde & Pia Weiss, 2006. "Relative Price Changes, Wages and Unemployment in a Specific Factors Model with Search Frictions," Review of Development Economics, Wiley Blackwell, vol. 10(3), pages 400-410, 08.
  24. Collier, Paul, 1975. "Labour Mobility and Labour Utilization in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 37(3), pages 169-89, August.
  25. den Haan, Wouter J. & Haefke, Christian & Ramey, Garey, 2004. "Turbulence and Unemployment in a Job Matching Model," IZA Discussion Papers 1403, Institute for the Study of Labor (IZA).
  26. Richard Rogerson, 2001. "Farm Work, Home Work and International Productivity Differences," Center for Development Economics 170, Department of Economics, Williams College.
  27. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," World Bank Economic Review, World Bank Group, vol. 13(2), pages 275-302, May.
  28. Gong, X. & van Soest, A.H.O. & Villagomez, E., 2000. "Mobility in the Urban Labor Market : A Panel Data Analysis for Mexico," Discussion Paper 2000-46, Tilburg University, Center for Economic Research.
  29. Corden, W M & Findlay, Ronald, 1975. "Urban Unemployment, Intersectoral Capital Mobility and Development Policy," Economica, London School of Economics and Political Science, vol. 42(165), pages 59-78, February.
  30. Gregory, Peter, 1980. "An Assessment of Changes in Employment Conditions in Less Developed Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 28(4), pages 673-700, July.
  31. Bencivenga, Valerie R & Smith, Bruce D, 1997. "Unemployment, Migration, and Growth," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 582-608, June.
  32. Calvo, Guillermo A, 1978. "Urban Employment and Wage Determination in LDC's: Trade Unions in the Harris-Todaro Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(1), pages 65-81, February.
  33. David J. McKenzie & Christopher Woodruff, 2006. "Do Entry Costs Provide an Empirical Basis for Poverty Traps? Evidence from Mexican Microenterprises," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 3-42.
  34. Jonathan Temple, 2005. "Dual Economy Models: A Primer For Growth Economists," Manchester School, University of Manchester, vol. 73(4), pages 435-478, 07.
  35. Agenor, Pierre-Richard, 2005. "Fiscal adjustment and labor market dynamics in an open economy," Journal of Development Economics, Elsevier, vol. 76(1), pages 97-125, February.
  36. Zenou, Yves, 2005. "The Todaro Paradox Revisited," Working Paper Series 652, Research Institute of Industrial Economics.
  37. S. Van Wijnbergen & Tony Venables, 1993. "Location choice," LSE Research Online Documents on Economics 2099, London School of Economics and Political Science, LSE Library.
  38. Brueckner, Jan K. & Zenou, Yves, 1999. "Harris-Todaro models with a land market," Regional Science and Urban Economics, Elsevier, vol. 29(3), pages 317-339, May.
  39. van Ours, Jan & Ridder, Geert, 1992. "Vacancies and the Recruitment of New Employees," Journal of Labor Economics, University of Chicago Press, vol. 10(2), pages 138-55, April.
  40. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March.
  41. Harold L. Cole & Richard Rogerson, 1996. "Can the Mortonson-Pissarides matching model match the business cycle facts?," Staff Report 224, Federal Reserve Bank of Minneapolis.
  42. Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
  43. Margaret Stevens, 2007. "New Microfoundations For The Aggregate Matching Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 847-868, 08.
  44. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
  45. Pierre-Richard Agénor, 2005. "The Analytics of Segmented Labor Markets," The School of Economics Discussion Paper Series 0529, Economics, The University of Manchester.
  46. Gong, Xiaodong & van Soest, Arthur, 2002. "Wage differentials and mobility in the urban labour market: a panel data analysis for Mexico," Labour Economics, Elsevier, vol. 9(4), pages 513-529, September.
  47. Hyeok Jeong, 2005. "Assessment of Relationship between Growth and Inequality: Micro Evidence from Thailand," IEPR Working Papers 05.20, Institute of Economic Policy Research (IEPR).
  48. Mazumdar, Dipak, 1983. "Segmented Labor Markets in LDCs," American Economic Review, American Economic Association, vol. 73(2), pages 254-59, May.
  49. Eicher, T. S., 1999. "Training, adverse selection and appropriate technology: Development and growth in a small open economy," Journal of Economic Dynamics and Control, Elsevier, vol. 23(5-6), pages 727-746, April.
  50. Stiglitz, Joseph E, 1976. "The Efficiency Wage Hypothesis, Surplus Labour, and the Distribution of Income in L.D.C.s," Oxford Economic Papers, Oxford University Press, vol. 28(2), pages 185-207, July.
  51. Kanbur, S M Ravi & McIntosh, James P, 1988. "Dual Economy Models: Retrospect and Prospect," Bulletin of Economic Research, Wiley Blackwell, vol. 40(2), pages 83-113, April.
  52. Yashiv, E., 1999. "The Determinants of Equilibrium Unemployment," Papers 36-99, Tel Aviv.
  53. van Ours, J.C. & Ridder, G., 1992. "Vacancies and recruitment of new employees," Other publications TiSEM 9acc708a-0885-46a2-aef5-7, Tilburg University, School of Economics and Management.
  54. Merz, Monika, 1995. "Search in the labor market and the real business cycle," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 269-300, November.
  55. Stiglitz, Joseph E, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC'S: The Labor Turnover Model," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 194-227, May.
  56. Moene, Karl Ove, 1988. "A reformulation of the Harris-Todaro mechanism with endogenous wages," Economics Letters, Elsevier, vol. 27(4), pages 387-390.
  57. M. Ayhan Kose & Christopher M. Towe & Guy Meredith, 2004. "How Has Nafta Affected the Mexican Economy? Review and Evidence," IMF Working Papers 04/59, International Monetary Fund.
  58. Levy, Santiago & Wijnbergen, Sweder van, 1994. "Labor markets, migration and welfare Agriculture in the North-American Free Trade Agreement," Journal of Development Economics, Elsevier, vol. 43(2), pages 263-278, April.
  59. Stephen L. Parente & Richard Rogerson & Randall Wright, 2000. "Homework in Development Economics: Household Production and the Wealth of Nations," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 680-687, August.
  60. Patrick J. Kehoe & Timothy J. Kehoe, 1994. "Capturing NAFTA's impact with applied general equilibrium models," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 17-34.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bri:uobdis:06/581. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jonathan Temple)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.