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Technology, Trade and ‘Urban Poor’ in a General Equilibrium Model with Segmented Domestic Factor Markets

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  • Soumyatanu Mukherjee

Abstract

Motivated by a set of stylised facts based on the provincial data for India, this paper, by utilising a four-sector general equilibrium framework with segmented labour and capital markets (domestic), proposes that factor-specific technological progress only in the capital-intensive segment of the urban formal sectors may affect the urban informal workers adversely, while a technological progress (trade-induced) in the vertically integrated skill-intensive formal sector benefits them. The quantitative analysis demonstrates that when both of the formal sectors undergo capital-using technological progress, urban informal wage may improve, provided the vertically integrated formal sector could save more on the capital cost of production compared to the relatively capital-intensive formal sector and capital flows to the informal sectors. This helps understand trends in urban poverty given the strong association between urban informal wage and the degree of urban poverty.

Suggested Citation

  • Soumyatanu Mukherjee, 2016. "Technology, Trade and ‘Urban Poor’ in a General Equilibrium Model with Segmented Domestic Factor Markets," Discussion Papers 2016-10, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:16/10
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    Cited by:

    1. Soumyatanu Mukherjee, 2016. "Opening the Pandora's Box – Liberalised Input Trade and Wage Inequality with Non-traded Goods and Segmented Unskilled Labour Markets," Discussion Papers 2016-15, University of Nottingham, GEP.
    2. Mukherjee, Soumyatanu, 2017. "Input trade reform and wage inequality," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 145-156.
    3. Broll, Udo & Mukherjee, Soumyatanu, 2017. "International trade and firms' attitude towards risk," Economic Modelling, Elsevier, vol. 64(C), pages 69-73.
    4. Udo Broll & Soumyatanu Mukherjee, 2016. "International trade and risk aversion elasticities," Discussion Papers 2016-17, University of Nottingham, GEP.
    5. Soumyatanu Mukherjee & Shreya Banerjee, 2018. "Implications of Trade policies in segmented factor markets – A general equilibrium approach," Discussion Papers 2018-01, University of Nottingham, GEP.

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    Keywords

    Technological Progress; Urban Informal Wage; General Equilibrium.;
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