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Economic recession, skilled unemployment and welfare

Sarbajit Chaudhuri ()

Economic Modelling, 2011, vol. 28, issue 3, 1435-1440

Abstract: The paper develops a three-sector, specific factor, general equilibrium model with two high-skill sectors and unemployment of skilled labor. One of the two high-skill sectors produces a non-traded commodity whose aggregate demand consists of both domestic demand and an exogenously given foreign demand. The consequences of a decline in the foreign demand for the non-traded good resulting from worldwide economic recession on the skilled and unskilled labor markets in a developing economy have been examined. The analysis finds that the effects on the labor markets crucially hinge on the relative factor intensities of the two high-skill sectors and that through the adoption of appropriate fiscal measures; the country can shield its workforce from the rage of global economic downturn.

Keywords: Economic; recession; Skilled; labor; Unskilled; labor; Skilled; unemployment; Informal; wage; Sen's; (1974); welfare; measure; General; equilibrium (search for similar items in EconPapers)
Date: 2011
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Handle: RePEc:eee:ecmode:v:28:y:2011:i:3:p:1435-1440