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Compliance with the Institutional Wage in Dualistic Models

Ana Paula Martins

No EERI_RP_2011_04, EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: This research extends simple two-sector models in order to inquire the impact of the extent of coverage or enforcement of minimum wage legislation in one of the sectors on the equilibrium outcome. Two versions of institutional wage avoidance are presented. They may be seen as representing different institutional detection rules: one working through worker complaint, the other through firm sampling inspection (and enforcement) by the legal system. Both cases are modelled as enlargements of two dualistic models: Harris-Todaro (the wage in the other sector is market determined) and Bhagwati-Hamada (the wage in the other sector is institutionally fixed and coverage is complete). Impact on population flows of changes in degree of coverage (compliance) is also confronted with the effect of a change in the institutional wage for each scenario.

Keywords: Migration; Mobility; Minimum Wages; Segmented Labor Markets; Informal Sector; Regional Labor Markets; Dualistic Models; Coverage. (search for similar items in EconPapers)
JEL-codes: O15 O17 O18 R23 J38 J42 J61 J62 F22 K42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-mig
Date: 2011-04-04
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Journal Article: Compliance with the Institutional Wage in Dualistic Models (2011) Downloads
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