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Job-Searching and Job-Matching in a Two-Sector General Equilibrium Model

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  • Bandopadhyay, Titas Kumar

Abstract

We extend the benchmark model of DMP in a two-sector general equilibrium framework by introducing a frictionless segment of the labour market. We also examine the effects of trade reforms and labour market reforms on equilibrium rate of unemployment and wage inequality in our stylitzed economy. We find that both these reforms reduce equilibrium rate of unemployment. However, trade reforms raise wage inequality but labour market reforms reduce it. These results provide a strong theoretical basis for labour market reform in a small open economy characterized by frictional labour market.

Suggested Citation

  • Bandopadhyay, Titas Kumar, 2014. "Job-Searching and Job-Matching in a Two-Sector General Equilibrium Model," MPRA Paper 59039, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:59039
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    References listed on IDEAS

    as
    1. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-833, December.
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    3. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
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    7. Pissarides, C A, 1984. "Efficient Job Rejection," Economic Journal, Royal Economic Society, vol. 94(376a), pages 97-108, Supplemen.
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    11. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627, Elsevier.
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    13. Margaret Stevens, 2007. "New Microfoundations For The Aggregate Matching Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 847-868, August.
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    More about this item

    Keywords

    Job-searching; Job-matching; General equilibrium; Trade liberalization;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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    This paper has been announced in the following NEP Reports:

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