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Welfare implications of technological progress with segmented factor markets

Author

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  • Mukherjee, Soumyatanu
  • Zafar, Sameen

Abstract

Using a Heckscher-Ohlin-Samuelson type general equilibrium framework with segmented factor markets, we show that uniform technological progress in either the unorganized or the fixed wage organized sector can improve the real income of a small, open developing economy. However, uniform productivity improvement in the unorganized sector turns out to be relatively more egalitarian since it helps the marginalized informal workers in terms of wage-earnings and employment whereas productivity take-off in the organized sector hurts them.

Suggested Citation

  • Mukherjee, Soumyatanu & Zafar, Sameen, 2014. "Welfare implications of technological progress with segmented factor markets," MPRA Paper 58245, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:58245
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    References listed on IDEAS

    as
    1. Hamid Beladi & Sarbajit Chaudhuri & Shigemi Yabuuchi, 2008. "Can International Factor Mobility Reduce Wage Inequality in a Dual Economy?," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 893-903, November.
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    6. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2008. "Fair Wage Hypothesis, International Factor Mobility and Skilled-Unskilled Wage Inequality in a Developing Economy," MPRA Paper 9303, University Library of Munich, Germany.
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    More about this item

    Keywords

    Technological progress; general equilibrium; segmented factor markets; welfare;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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