Chaudhuri, Sarbajit and Banerjee, Dibyendu (2009): Foreign Capital, National Welfare and Unemployment in a Fair Wage Model.
Download (252kB) | Preview
The paper develops a three-sector general equilibrium model that can explain simultaneous existence of unemployment of both skilled and unskilled labour. The unemployment of unskilled labour is explicated in terms of rural-urban migration mechanism while that of skilled labour is shown using the ‘fair wage hypothesis’. The paper finds that foreign direct investment (FDI) in the primary export sector improve both national welfare and urban unemployment problem of unskilled labour while the consequences of foreign capital flows into the import-competing sector and high-skill export sector are ambiguous. The paper justifies the desirability of FDI flow in the primary export sector from the perspective of both unemployment and social welfare.
|Item Type:||MPRA Paper|
|Original Title:||Foreign Capital, National Welfare and Unemployment in a Fair Wage Model|
|English Title:||Foreign Capital, National Welfare and Unemployment in a Fair Wage Model|
|Keywords:||Fair wage hypothesis; skilled labour; unskilled labour; national welfare; unemployment.|
|Subjects:||F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations
J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Labor Contracts
F - International Economics > F1 - Trade > F10 - General
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration
|Depositing User:||Sarbajit Chaudhuri|
|Date Deposited:||22 Oct 2009 09:53|
|Last Modified:||22 Sep 2016 01:44|
Agell, J. and Lundborg, P. (1995): ‘Fair wages in the open economy’, Economica 62, 325-351.
Agell, J. and Lundborg, P. (1992): ‘Fair wages, involuntary unemployment and tax policy in the simple general equilibrium model’, Journal of Public Economics 47, 299-320.
Akerlof, G. and Yellen, J. (1990): ‘The fair wage effort hypothesis and unemployment’, Quarterly Journal of Economics 105, 255-284.
Bardhan, P.K. (1973): ‘A model of growth of capitalism in a dual agrarian economy’. In: Bhagwati, J.M., Eckaus, R.S. (Eds.), Development and Planning: Essays in Honour of Paul Rosenstein-Rodan. USA, MIT Press.
Beladi, H. and Marjit, S. (1992a): ‘Foreign capital and protectionism’, Canadian Journal of Economics 25, 233-238.
Beladi, H. and Marjit, S. (1992b): ‘Foreign capital, unemployment and national welfare’, Japan and the World Economy. 4, 311-317.
Bliss, C.J. and Stern, N,H. (1978): ‘Productivity, wages, and nutrition, Parts I and II’, Journal of Development Economics 5.
Brecher, R.A. and Alejandro, C.F. Diaz (1977): ‘Tariffs, foreign capital and immiserizing growth’, Journal of International Economics 7, 317-322.
Chandra,V. and Khan, M. A. (1993): ‘Foreign investment in the presence of an informal sector’, Economica 60, 79-103.
Chaudhuri, S. and Yabuuchi, S. (2008): ‘Foreign capital and skilled-unskilled wage inequality in a developing economy with non-traded goods. In S. Marjit and E. Yu (eds.), Contemporary and Emerging Issues in Trade Theory and Policy, Emerald Group Publishing Limited, UK.
Chaudhuri, S. (2007): ‘Foreign capital, welfare and unemployment in the presence of agricultural dualism’, Japan and the World Economy 19, 149-165.
Chaudhuri, S. (2005): ‘Labour market distortion, technology transfer and gainful effects of foreign capital’, The Manchester School 73(2), 214-227.
Chaudhuri, S., Yabuuchi S. and Mukhopadhyay U. (2006): ‘Inflow of foreign capital and trade liberalization in a model with an informal sector and urban unemployment’, Pacific Economic Review 11, 87-103.
Dasgupta, P. and Ray, D. (1986): ‘Inequality as a determinant of malnutrition and unemployment’ Economic Journal 96, 1011-1034.
Deshpande, R.S. (2007): ‘Our approach must be guarded and cautious’, The Financial Express (16.07.2007). Also available at http://www.financialexpress.com/news/our-approach-must-be-guarded-and-cautious/205151/0
Feher, E. (1991): ‘Fair wages and unemployment’, Dept. of Economics, University of Technology, Vienna.
Grinols, E. L. (1991): ‘Unemployment and foreign capital: the relative opportunity cost of domestic labour and welfare’, Economica 57, 107-121.
Harris, J.R. and Todaro, M. P. (1970): ‘Migration, unemployment and development: a two-sector analysis’, American Economic Review 60, 126-142.
Khan, M. A. (1982): ‘Tariffs, foreign capital and immiserizing growth with urban unemployment and specific factors of production’, Journal of Development Economics 10, 245-256.
Leibenstein, H. (1957): Economic Backwardness and Economic Growth, Wiley, New York.
Marjit, S. and Beladi, H. (1996): ‘Protection and gainful effects of foreign capital’, Economics Letters 53, 311-326.
Serneels, P.M. (2007): ’The nature of unemployment among young men in urban Ethiopia’, Review of Development Economics 11(1), 170-186.