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International Trade, Migration and Unemployment – The Role of Informal Sector

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  • Marjit, Sugata
  • Mandal, Biswajit

Abstract

This paper provides an elaborate general equilibrium framework by including informal economic activities in a model of trade, migration and unemployment. Existence of informal activities is critical in generating positive employment effects of liberal trade policies. Following a tariff cut informal wage increases and rate of unemployment goes down under reasonable conditions. Next we generalize the benchmark model to capture the phenomenon of sequential migration: from agriculture to urban informal sector, and then to urban formal sector. The paper also extends the benchmark model to include both informal intermediate and final good.

Suggested Citation

  • Marjit, Sugata & Mandal, Biswajit, 2015. "International Trade, Migration and Unemployment – The Role of Informal Sector," MPRA Paper 68225, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:68225
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    International Trade; Employment; Informal Wage; General Equilibrium.;

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • F1 - International Economics - - Trade
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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