Recessionary shock and factor return in an underemployed economy
This paper builds a general equilibrium model for a small open economy with unemployment of unskilled labor to assess the impact of a recessionary shock. It is shown that irrespective of the factor intensity assumption skilled wage and rental ratio goes up if recession led price fall is significant. However, when the price fall is not sufficiently big, factor intensity assumption becomes crucial for the eventual effect on factors’ return ration.
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- Chaudhuri, Sarbajit, 2009. "Economic Recession and Informal Sector Workers," MPRA Paper 18033, University Library of Munich, Germany.
- Ronald W. Jones, 1965. "The Structure of Simple General Equilibrium Models," Journal of Political Economy, University of Chicago Press, vol. 73, pages 557-557.
- Biswajit Mandal, 2016.
"Recessionary Shock, Capital Mobility and the Informal Sector,"
South Asia Economic Journal,
Institute of Policy Studies of Sri Lanka, vol. 17(1), pages 149-162, March.
- Mandal, Biswajit & Marjit, Sugata & Beladi, Hamid, 2010. "Recessionary shock, capital mobility and the informal sector," MPRA Paper 33736, University Library of Munich, Germany, revised Jan 2011.
- Marjit, Sugata & Chaudhuri, Sarbajit & Kar, Saibal, 2009.
"Recession in the Skilled Sector and Implications for Informal Wage,"
18003, University Library of Munich, Germany.
- Marjit, Sugata & Kar, Saibal & Chaudhuri, Sarbajit, 2011. "Recession in the skilled sector and implications for informal wage," Research in Economics, Elsevier, vol. 65(3), pages 158-163, September.
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