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

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  • 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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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Job search; foreign capital; unemployment rate; ex-post labour; ex-ante labour; general equilibrium;
    All these keywords.

    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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