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Job-search and foreign capital inflow — A two sector general equilibrium analysis

Titas Bandopadhyay and Sarbajit Chaudhuri ()

Economic Modelling, 2011, vol. 28, issue 6, 2494-2501

Abstract: The purpose of this paper is to extend the Fields' (1989) multi sector job-search model by introducing international trade and capital. Two types of capital are considered: fixed capital and mobile capital. The effects of search intensity and the inflow of foreign capital on the volume and the rate of urban unemployment and on the social welfare are also examined in both of the two cases. The main finding is: more efficient on-the-job search from the rural sector raises unemployment rate when capital is mobile between the two sectors. This is counterproductive to the standard result.

Keywords: Job search; Foreign capital; Unemployment rate; Ex-post labor; Ex-ante labor; General equilibrium (search for similar items in EconPapers)
JEL-codes: F10 I28 J10 J13 (search for similar items in EconPapers)
Date: 2011
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