CORRUPTION AND REAL WAGES IN GENERAL EQUILIBRIUM TRADE MODELS

Soumyatanu Mukherjee and T Thasni ()
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T Thasni: Indian Institute of Management Kozhikode

No 348, Working papers from Indian Institute of Management Kozhikode

Abstract: The present paper explores the impact of corruption on the real wage of informal sector workers in a general equilibrium model of production and trade. The proposed general equilibrium model is a two-sector two-factor framework that models segmented labor market. There is a handful of literature examining the real wages on labor in a segmented labor market framework. This paper has been the first attempt to investigate that gap, the real wages in asegmented labor market with the existence of corruption and a unionized sector. We have come up with the striking finding that a reduction in the degree of corruption may benefit workers in the informal sector if the formal sector is relatively capital intensive in a value sense.

Keywords: Corruption; Informal wage; Unionization; International Trade; Production linkages; Comparative advantage; Institutional quality; Informal sector; Sectoral allocation (search for similar items in EconPapers)
Pages: 16 pages
Date: 2019-10
New Economics Papers: this item is included in nep-iue
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Persistent link: https://EconPapers.repec.org/RePEc:iik:wpaper:348

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