Modeling Labor Market Segmentation
In this paper, we develop a model that captures stylized facts of informal labor markets. We show how justice interference on informal contracts leads to penalties in the equilibrium wage of informal workers. We also state that, in a repeated game situation, an equilibrium where the wage gaps between formal and informal contracts diminish with the worker skills exists and is unique. These claims are supported by two assumptions: (i) the existence of a technology that makes possible a ?rm to buy information about the worker productivity and past actions; (ii) unskilled workers have a more homogenous productivity than the skilled workers.
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- Fernando Botelho & Vladimir Ponczek, 2011.
"Segmentation in the Brazilian Labor Market,"
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1993-11, Tilburg University, Center for Economic Research.
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"Manufacuring firms in developing countries - how well do they do, and why?,"
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- Carmen Pagés-Serra, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- James J. Heckman & Carmen Pagés, 2004. "Introduction to "Law and Employment: Lessons from Latin American and the Caribbean"," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 1-108 National Bureau of Economic Research, Inc.
- Hartmut Lehmann & Norberto Pignatti, 2008.
"Informal Employment Relationships and Labor Market Segmentation in Transition Economies: Evidence from Ukraine,"
ESCIRRU Working Papers
3, DIW Berlin, German Institute for Economic Research.
- Lehmann, Hartmut & Pignatti, Norberto, 2007. "Informal Employment Relationships and Labor Market Segmentation in Transition Economies: Evidence from Ukraine," IZA Discussion Papers 3269, Institute for the Study of Labor (IZA).
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- Magnac, Th, 1991. "Segmented or Competitive Labor Markets," Econometrica, Econometric Society, vol. 59(1), pages 165-87, January.
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