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Job-search and FDI in a two-sector general equilibrium model

Author

Listed:
  • Bandopadhyay, Titas Kumar
  • Chaudhuri, Sarbajit

Abstract

The purpose of this paper is to extend the Fields’ (1989) multi sector job-search model by introducing international trade and capital. Two types of capital are considered: fixed capital and mobile capital. The effects of search intensity and the inflow of foreign capital on the volume and the rate of urban unemployment and on the social welfare are also examined in both of the two cases. The main finding is: more efficient on-the-job search from the rural sector raises unemployment rate when capital is mobile between the two sectors. This is counterproductive to the standard result.

Suggested Citation

  • Bandopadhyay, Titas Kumar & Chaudhuri, Sarbajit, 2011. "Job-search and FDI in a two-sector general equilibrium model," MPRA Paper 35564, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:35564
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    File URL: https://mpra.ub.uni-muenchen.de/35564/1/MPRA_paper_35564.pdf
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    References listed on IDEAS

    as
    1. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 989-1016, November.
    2. JuanJ. Dolado & Marcel Jansen & JuanF. Jimeno, 2009. "On-the-Job Search in a Matching Model with Heterogeneous Jobs and Workers," Economic Journal, Royal Economic Society, vol. 119(534), pages 200-228, January.
    3. Edward M. Gramlich, 1976. "Impact of Minimum Wages on Other Wages, Employment, and Family Incomes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(2), pages 409-462.
    4. J. J. McCall, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, Oxford University Press, vol. 84(1), pages 113-126.
    5. Fields, Gary S., 1989. "On-the-job search in a labor market model : Ex ante choices and ex post outcomes," Journal of Development Economics, Elsevier, vol. 30(1), pages 159-178, January.
    6. Fatih Macit, 2010. "Labor Market Institutions and Wage and Inflation Dynamics," Economic Analysis and Policy, Elsevier, vol. 40(3), pages 393-410, December.
    7. Peter G. Mavromatis & George Verikios, 2008. "Does it Matter Whether Market Distortions are Evaluated Using Comparative-statics or Dynamics?," Centre of Policy Studies/IMPACT Centre Working Papers g-178, Victoria University, Centre of Policy Studies/IMPACT Centre.
    8. James Mabli & Christopher Flinn, 2007. "On-the-Job Search, Minimum Wages, and Labor Market Outcomes in an Equilibrium Bargaining Framework," 2007 Meeting Papers 791, Society for Economic Dynamics.
    9. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    10. Xinpeng Xu & Yu Sheng, 2014. "Terms of Trade Shocks and Endogenous Search Unemployment: A Two-Sector Model with Non-Traded Goods," Pacific Economic Review, Wiley Blackwell, vol. 19(2), pages 201-215, May.
    11. Robert M. Hussey, 2005. "On-the-Job Search and Wage Rigidity in a General Equilibrium Model," Computing in Economics and Finance 2005 393, Society for Computational Economics.
    12. Sen, Amartya, 1974. "Informational bases of alternative welfare approaches : Aggregation and income distribution," Journal of Public Economics, Elsevier, vol. 3(4), pages 387-403, November.
    13. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
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    More about this item

    Keywords

    Job search; foreign capital; unemployment rate; ex-post labour; ex-ante labour; general equilibrium;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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