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Regionalization and Labour Market Regidities in Developing Countries

Author

Listed:
  • Decaluwe, B.
  • Dissou, Y.
  • Robichaud, V.

Abstract

In this study, we analyse the impact of the creation of a customs union among UEMOA (Western African Economic and Monetary Union)countries, with a special emphasis on the labour market structure. The implementation of the customs union reform will translate in most of these countries, into a greater openness, even with third party countries. This greater openness raises concerns in these countries as regards its potential impact on welfare, production and employment. In this study, in contrast to many other papers, we relax the assumption of a perfect functioning of the labour market. We consider the presence of a dualism in the labour market and the existence of a minimum wage for the formal workers. We use a multi-country and multi-sectoral computable general equilibrium model (CGE) to assess the impact of the reform. We find that the presence of a minimum nominal wage for the formal workers may significantly reduce the gains stemming from the customs union reform. Our simulation results indicate that the costs induced by this rigidity may exceed 45%, in some cases, in terms of the reduction in the welfare gains obtained without rigidity.

Suggested Citation

  • Decaluwe, B. & Dissou, Y. & Robichaud, V., 1999. "Regionalization and Labour Market Regidities in Developing Countries," Papers 9917, Laval - Recherche en Politique Economique.
    • Handle: RePEc:fth:lavape:9917
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    Cited by:

    1. Decaluwé, B. & Dumont, J.-C. & Mesplé-Somps, S. & Robichaud, V., 2000. "Union économique et mobilité des facteurs; le cas de l'Union Économique et Monétaire Ouest Africain (UEMOA)," Cahiers de recherche 0009, Université Laval - Département d'économique.

    More about this item

    Keywords

    CUSTOMS UNIONS ; LABOUR MARKET ; WAGES;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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