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Sweatshop Equilibrium

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Listed:
  • Chau, Nancy H.

    (Cornell University)

Abstract

This paper presents a capability-augmented model of on the job search, in which sweatshop conditions stifle the capability of the working poor to search for a job while on the job. The augmented setting unveils a sweatshop equilibrium in an otherwise archetypal Burdett-Mortensen economy, and reconciles a number of oft noted yet perplexing features of sweatshop economies. We demonstrate existence of multiple rational expectation equilibria, graduation pathways out of sweatshops in complete absence of enforcement, and country-specific efficiency and distributional responses to competitive forces and social safety nets depending precisely on whether graduation criteria are met.

Suggested Citation

  • Chau, Nancy H., 2009. "Sweatshop Equilibrium," IZA Discussion Papers 4363, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp4363
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    References listed on IDEAS

    as
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    1. Sweatshop equilibrium
      by Economic Logician in Economic Logic on 2009-09-22 19:59:00

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    More about this item

    Keywords

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    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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