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Labour Informality, Selective Migration, and Productivity in General Equilibrium

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  • Huikang Ying

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Abstract

This paper studies the interactions between urban labour informality and selective migration, and explores the consequences of productivity changes at both sectoral and individual levels. It proposes a general equilibrium model with heterogeneous workers to characterize the sizable agriculture sector and urban informality in developing economies, and discusses implications for wages and inequality. The model links the size of the urban informal sector to the distributions of individual productivity endowments. The finding suggests that improving average individual skills is an efficient way to alleviate urban underemployment. Equilibrium responses also indicate that changes in labour markets have only modest effects on wages and inequality.

Suggested Citation

  • Huikang Ying, 2015. "Labour Informality, Selective Migration, and Productivity in General Equilibrium," Bristol Economics Discussion Papers 15/653, Department of Economics, University of Bristol, UK.
  • Handle: RePEc:bri:uobdis:15/653
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    File URL: http://www.efm.bris.ac.uk/economics/working_papers/pdffiles/dp15653.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Rural-urban migration; informal sector; productivity changes; wage inequality;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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