Growth and Labour Markets in Developing Countries

Jonathan Temple and Mathan Satchi

No 5515, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 selfemployment 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; Matching frictions; Urban unemployment; dual economies (search for similar items in EconPapers)
JEL-codes: J40 O10 (search for similar items in EconPapers)
Date: 2006-02
New Economics Papers: this item is included in nep-dev
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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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