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Ethnic Dualism and Communication Costs – Explaining Segmentation and Wage Inertia

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  • Kalckreuth, Ulf von

Abstract

What is the impact of international migration on the wage structure? Empirically, it is difficult to find any effect at all. This essay gives a new theoretical explanation for this conspicuous absence, emphasising non-convexities in the technology of individual firms due to communication costs. With high costs of coordination between workers, the labour force will segregate on the workshop level. In this case, the aggregate production technology has linear segments, and within certain bounds, additional labour input is absorbed without changing the relative factor prices. A local non-substitution theorem is derived.

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  • Kalckreuth, Ulf von, 2000. "Ethnic Dualism and Communication Costs – Explaining Segmentation and Wage Inertia," Discussion Papers 593, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    • Handle: RePEc:mnh:vpaper:1018
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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