IDEAS home Printed from https://ideas.repec.org/p/csl/devewp/395.html
   My bibliography  Save this paper

Job Creation in a Multi-Sector Labor Market Model for Developing Economies

Author

Listed:
  • Arnab K. Basu

    (Cornell University)

  • Nancy H. Chau

    (Cornell University and Centro Studi Luca d’Agliano)

  • Gary S. Fields

    (Cornell University)

  • Ravi Kanbur

    (Cornell University)

Abstract

This paper proposes an overlapping generations multi†sector model of the labor market for developing countries with three heterogeneities – heterogeneity within self†employment, heterogeneity in ability, and heterogeneity in age. We revisit an iconic paradox in a class of multi†sector labor market models in which the creation of high†age employment exacerbates unemployment. Our richer setting allows for generational differences in the motivations for job search to be reflected in two distinct inverted U†shaped relationships between unemployment and high†wage employment, one for Youth and a different one for adults. In turn, the relationship between overall unemployment and high†wage employment is shown to be non†monotonic and multi†peaked.  The model also sheds light on the implications of increasing high†wage employment on self†employed workers, who make up most of the world’s poor. Non†monotonicity in unemployment notwithstanding, increasing high†wage employment has an unambiguous positive impact on high†paying self†employment, and an unambiguous negative impact on free†entry (low†wage) self†employment.

Suggested Citation

  • Arnab K. Basu & Nancy H. Chau & Gary S. Fields & Ravi Kanbur, 2016. "Job Creation in a Multi-Sector Labor Market Model for Developing Economies," Development Working Papers 395, Centro Studi Luca d'Agliano, University of Milano, revised 01 Jun 2016.
  • Handle: RePEc:csl:devewp:395
    as

    Download full text from publisher

    File URL: http://www.dagliano.unimi.it/media/WP2016_395.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michel Beine & Pauline Bourgeon & Jean-Charles Bricongne, 2013. "Aggregate Fluctuations and International Migration," CESifo Working Paper Series 4379, CESifo Group Munich.
    2. Lewer, Joshua J. & Van den Berg, Hendrik, 2008. "A gravity model of immigration," Economics Letters, Elsevier, vol. 99(1), pages 164-167, April.
    3. Raven Molloy & Christopher L. Smith & Abigail Wozniak, 2011. "Internal Migration in the United States," Journal of Economic Perspectives, American Economic Association, pages 173-196.
    4. Decressin, Jorg & Fatas, Antonio, 1995. "Regional labor market dynamics in Europe," European Economic Review, Elsevier, vol. 39(9), pages 1627-1655, December.
    5. Michel Beine & Simone Bertoli & Jesús Fernández-Huertas Moraga, 2016. "A Practitioners’ Guide to Gravity Models of International Migration," The World Economy, Wiley Blackwell, vol. 39(4), pages 496-512, April.
    6. Anna Maria Mayda, 2006. "Who Is Against Immigration? A Cross-Country Investigation of Individual Attitudes toward Immigrants," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 510-530, August.
    7. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, Elsevier.
    8. Robert C. M. Beyer & Frank Smets, 2015. "Editor'S Choice Labour market adjustments and migration in Europe and the United States: how different?," Economic Policy, CEPR;CES;MSH, vol. 30(84), pages 643-682.
    9. Julia Jauer & Thomas Liebig & John P. Martin & Patrick Puhani, 2014. "Migration as an Adjustment Mechanism in the Crisis? A Comparison of Europe and the United States," OECD Social, Employment and Migration Working Papers 155, OECD Publishing.
    10. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
    11. Barslund, Mikkel & Busse, Matthias, 2014. "Making the Most of EU Labour Mobility," CEPS Papers 9701, Centre for European Policy Studies.
    12. Jimeno, Juan F. & Bentolila, Samuel, 1998. "Regional unemployment persistence (Spain, 1976-1994)," Labour Economics, Elsevier, vol. 5(1), pages 25-51, March.
    13. Raven S. Molloy & Christopher L. Smith & Abigail Wozniak, 2013. "Declining migration within the US: the role of the labor market," Finance and Economics Discussion Series 2013-27, Board of Governors of the Federal Reserve System (U.S.).
    14. Prakash Loungani & Davide Furceri & Mai Dao, 2015. "Regional labor market adjustment in the United States," 2015 Meeting Papers 733, Society for Economic Dynamics.
    15. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    16. Bennett W Sutton & Tamim Bayoumi & Andrew J Swiston, 2006. "Shocking Aspects of Canadian Labor Markets," IMF Working Papers 06/83, International Monetary Fund.
    17. Simon Commander & Mari Kangasniemi & L. Alan Winters, 2004. "The Brain Drain: Curse or Boon? A Survey of the Literature," NBER Chapters,in: Challenges to Globalization: Analyzing the Economics, pages 235-278 National Bureau of Economic Research, Inc.
    18. Mai Dao & Davide Furceri & Prakash Loungani, 2014. "Regional Labor Market Adjustments in the United States," IMF Working Papers 14/211, International Monetary Fund.
    19. Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2008. "Selection and network effects--Migration flows into OECD countries 1990-2000," European Economic Review, Elsevier, vol. 52(7), pages 1160-1186, October.
    20. Maurice Obstfeld & Giovanni Peri, 1998. "Regional non-adjustment and fiscal policy," Economic Policy, CEPR;CES;MSH, vol. 13(26), pages 205-259, April.
    21. Calvo, Guillermo & Coricelli, Fabrizio & Ottonello, Pablo, 2012. "The Labor Market Consequences of Financial Crises With or Without Inflation: Jobless and Wageless Recoveries," CEPR Discussion Papers 9218, C.E.P.R. Discussion Papers.
    22. Anna Mayda, 2010. "International migration: a panel data analysis of the determinants of bilateral flows," Journal of Population Economics, Springer;European Society for Population Economics, pages 1249-1274.
    23. Mai Dao & Davide Furceri & Prakash Loungani, 2014. "Regional Labor Market Adjustments in the United States and Europe," IMF Working Papers 14/26, International Monetary Fund.
    24. David Karemera & Victor Iwuagwu Oguledo & Bobby Davis, 2000. "A gravity model analysis of international migration to North America," Applied Economics, Taylor & Francis Journals, vol. 32(13), pages 1745-1755.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Job Creation in a Multi-Sector Labor Market Model for Developing Economies
      by maximorossi in NEP-LTV blog on 2016-09-06 01:26:28

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luc Christiaensen & Joachim De Weerdt & Ravi Kanbur, 2017. "Cities, towns, and poverty: Migration equilibrium and income distribution in a Todaro-type model with multiple destinations," Working Papers 434, ECINEQ, Society for the Study of Economic Inequality.
    2. Luc Christiaensen & Joachim De Weerdt & Ravi Kanbur, 2017. "Cities, Towns, and Poverty: Migration Equilibrium and Income Distribution in a Todaro-type Model with Multiple Destinations," Working Papers id:11955, eSocialSciences.
    3. Luc Christiaensen & Joachim De Weerdt & Ravi Kanbur, 2017. "Cities, Towns, and Poverty: Migration Equilibrium and Income Distribution in a Todaro-type Model with Multiple Destinations," LICOS Discussion Papers 39517, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

    More about this item

    Keywords

    Multisector Labor Market; Overlapping Generations; Poverty Reduction; Harris†Todaro Model;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:csl:devewp:395. 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: (Chiara Elli). General contact details of provider: http://edirc.repec.org/data/damilit.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.