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On-The-Job Search, Urban Informal Sector And The Development Policies-A General Equilibrium Analysis

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  • Titas Bandopadhyay

    (Bagnan College)

Abstract

The purpose of this paper is to examine the Fields (1989) proposition1 in a multi sector general equilibrium model with perfect and imperfect capital mobility2. The effects of different fiscal policies on the equilibrium rate of urban unemployment are also examined here3. The main findings are more efficient on-the-job search from the rural sector raises equilibrium urban unemployment rate whereas increased job search efficiency from the urban informal sector lowers this rate. Again urban subsidy policy lowers the equilibrium urban unemployment rate and rural subsidy policy raises this rate. Urban formal sector enlargement leads to a change in ex-ante and ex-post labour force in the rural sector even if urban informal sector wage rate is constant. All the results are obtained both in the case of perfect and imperfect capital mobility.

Suggested Citation

  • Titas Bandopadhyay, 2005. "On-The-Job Search, Urban Informal Sector And The Development Policies-A General Equilibrium Analysis," GE, Growth, Math methods 0511004, EconWPA.
  • Handle: RePEc:wpa:wuwpge:0511004
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    References listed on IDEAS

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    1. Lundborg, Per, 1990. "Rural-urban migration and the transition from traditional to modern agriculture," Journal of Development Economics, Elsevier, vol. 33(2), pages 287-307, October.
    2. Corden, W M & Findlay, Ronald, 1975. "Urban Unemployment, Intersectoral Capital Mobility and Development Policy," Economica, London School of Economics and Political Science, vol. 42(165), pages 59-78, February.
    3. Hamada, Koichi, 1974. "An economic analysis of the duty-free zone," Journal of International Economics, Elsevier, vol. 4(3), pages 225-241, August.
    4. Gupta, Manash Ranjan, 1994. "Foreign capital, income inequality and welfare in a Harris-Todaro model," Journal of Development Economics, Elsevier, vol. 45(2), pages 407-414, December.
    5. Gupta, Manash Ranjan, 1995. "Tax on foreign capital income and wage subsidy to the urban sector in the Harris-Todaro model," Journal of Development Economics, Elsevier, vol. 47(2), pages 469-479, August.
    6. 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.
    7. Grinols, Earl L, 1991. "Unemployment and Foreign Capital: The Relative Opportunity Costs of Domestic Labour and Welfare," Economica, London School of Economics and Political Science, vol. 58(229), pages 107-121, February.
    8. Stiglitz, Joseph E, 1976. "The Efficiency Wage Hypothesis, Surplus Labour, and the Distribution of Income in L.D.C.s," Oxford Economic Papers, Oxford University Press, vol. 28(2), pages 185-207, July.
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    18. Quibria, M G, 1988. "Migration, Trade Unions, and the Informal Sector: A Note on Calvo," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(3), pages 557-563, August.
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    More about this item

    Keywords

    job search; informal sector; development policy;

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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