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Labour Markets and Productivity in Developing Countries

Mathan Satchi and Jonathan Temple ()

Studies in Economics from School of Economics, University of Kent

Abstract: In middle-income countries, the informal sector often accountes for a substantial fraction of the urban labour force. We develop a general equilibrium model with matching frictions in the urban labour market, the possibility of self-employment in the informal sector, and scope for rural-urban migration. We investigate the effects of different types of growth on wages and the informal sector, and the extent to which labour market institutions can influence aggregate productivity. We quantify these effects by calibrating the model to data for Mexico.

Keywords: informal sector; urban unemployment; dual economies; matching frictions (search for similar items in EconPapers)
JEL-codes: J40 O10 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-dev, nep-dge and nep-lab
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Journal Article: Labor Markets and Productivity in Developing Countries (2009) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ukc:ukcedp:0805

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