Growth and labour markets in developing countries

Mathan Satchi and Jonathan Temple

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: In middle-income countries, the informal sector often accounts for a substantial fraction of urban employment. We develop a general equilibrium model with matching frictions in the urban labour market, the possibility of self-employment in the informal sector, and scope for rural-urban migration. We investigate the effects of different types of growth on wages and the informal sector, and the extent to which labour market institutions can influence aggregate productivity. We quantify these effects by calibrating the model to data for Mexico, a country with a sizeable informal sector and significant labour market rigidities.

Keywords: informal sector; urban unemployment; dual economies; matching frictions (search for similar items in EconPapers)
JEL-codes: J40 O10 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2006-01
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Growth and Labour Markets in Developing Countries (2006)
Working Paper: Growth and labour markets in developing countries (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:06/581

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