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Labour market, international trade, and unemployment in a less developed country

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  • Fernando Mesa

Abstract

This paper constructs a trade general equilibrium model for a less developed country with three sectors. One is the informal and un-tradable sector characterized by flexible wages, while the other two sectors are tradable, export and import sectors. The model imposes a binding minimum wage over the unskilled labour and efficient wage distortions on the skilled labour. Comparative statics is driven to analyze the effects on the labour market as consequence of opening the economy, raising the minimum wage and the introduction of an augmenting productivity in the export sector.

Suggested Citation

  • Fernando Mesa, 2011. "Labour market, international trade, and unemployment in a less developed country," Documentos de Trabajo 8908, Universidad del Rosario.
    • Handle: RePEc:col:000092:008908
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    File URL: http://repository.urosario.edu.co/bitstream/handle/10336/10803/8908.pdf
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    References listed on IDEAS

    as
    1. Fajnzylber, Pablo & Maloney, William F., 2005. "Labor demand and trade reform in Latin America," Journal of International Economics, Elsevier, vol. 66(2), pages 423-446, July.
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    6. Marjit, Sugata, 2003. "Economic reform and informal wage--a general equilibrium analysis," Journal of Development Economics, Elsevier, vol. 72(1), pages 371-378, October.
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    More about this item

    Keywords

    Trade reforms; Trade and labor markets interactions; Demand for labor.;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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