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Wage indexation, migration, and unemployment

journal contribution
posted on 2000-01-01, 00:00 authored by B R Hazari, Pasquale Sgro
This article sets up a two-goods model with wage indexation and migrants. A dual labor market is introduced where the domestic workers receive an indexed wage while migrants receive a market-determined wage. The traded sector may be assumed to be unionized while the non-traded goods sector is non-unionized giving rise to flexible wages. This provides an example of segmentation and wage indexation. The wage indexation creates unemployment in the traded sector and the segmentation allows this unemployment to persist. The main results obtained are: sector-specific migration of labor may raise domestic welfare, while with capital accumulation such migration necessarily raises the relative price of the non-traded goods, leading to structural adjustment.

History

Journal

International review of economics and finance

Volume

9

Issue

3

Pagination

257 - 265

Publisher

Elsevier

Location

Amsterdam, The Netherlands

ISSN

1059-0560

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2000, Elsevier

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