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Labor Market Distortions and Structural Adjustments in Developing Countries

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  • Sebastian Edwards
  • Alejandra Cox Edwards

Abstract

The purpose of this paper is to provide a typology of different labor market configurations and investigate how two major structural adjustment policies, namely a trade liberalization reform and the relaxation of capital controls, affect the level of aggregate employment and the rate of unemployment. We consider a number of models starting from the traditional Australian approach. We then analyze a multiple sectors intertemporal setting and a model with uncertainty and search. We identify situations under which structural adjustment results in unemployment.

Suggested Citation

  • Sebastian Edwards & Alejandra Cox Edwards, 1990. "Labor Market Distortions and Structural Adjustments in Developing Countries," NBER Working Papers 3346, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3346
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    2. Fiszbein, Ariel, 1992. "Do workers in the informal sector benefit from cuts in the minimum wage?," Policy Research Working Paper Series 826, The World Bank.

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