Job creation in a multi-sector labour market model for developing economies

Arnab Basu, Nancy Chau, Gary Fields () and Ravi Kanbur

Oxford Economic Papers, 2019, vol. 71, issue 1, 119-144

Abstract: This paper proposes an overlapping generations multi-sector model of the labour market for developing countries with four heterogeneities—heterogeneity within self-employment, heterogeneity in job experience, heterogeneity in pathways to self-employment, and heterogeneity in ability. We revisit an iconic paradox in a class of multi-sector labour market models in which the creation of high-wage employment exacerbates unemployment. Our richer setting allows for generational differences in the motivations for job search to be reflected in two distinct inverted-U-shaped relationships between unemployment and high-wage employment, one for youth and another for adults. In turn, the relationship between overall unemployment and high-wage employment is shown to be non-monotonic and multi-peaked. The model also sheds light on the implications of increasing high-wage employment on self-employed workers. Non-monotonicity in unemployment notwithstanding, increasing high-wage employment leads to an unambiguous increase in high-paying self-employment, and an unambiguous decrease in free-entry (low-wage) self-employment.

JEL-codes: I32 O17 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1093/oep/gpy029 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Job Creation in a Multi-Sector Labor Market Model for Developing Economies (2016)
Working Paper: Job Creation in a Multi-Sector Labor Market Model for Developing Economies (2016)
Working Paper: Job Creation in a Multi-Sector Labor Market Model for Developing Economies (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:71:y:2019:i:1:p:119-144.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Oxford Economic Papers is currently edited by James Forder and Francis J. Teal

More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().