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Globalization, Labour Market Segmentation, Unemployment and Wage Inequality: A Theoretical Analysis

Author

Listed:
  • Banerjee, Rakhi

    (Gurudas College, Kolkata)

  • Narayan Nag, Ranjanendra

    (St. Xavier’s College)

Abstract

In this paper we build up a three-sector general equilibrium framework to examine impact of agricultural trade liberalization, tariff rate restructuring and inflow of Foreign Direct Investment on unemployment and wage inequality in an emerging market economy. The paper shows that agricultural trade liberalization and tariff rate restructuring reduces the skilled-unskilled wage gap whereas increase in inflow of foreign capital may lead to worsening of income distribution. Multiple cross effects, factor specificity and factor intensity ranking play important roles in determining changes in output composition, factor rewards and unemployment in the wake of economic reforms.

Suggested Citation

  • Banerjee, Rakhi & Narayan Nag, Ranjanendra, 2011. "Globalization, Labour Market Segmentation, Unemployment and Wage Inequality: A Theoretical Analysis," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 26, pages 578-599.
    • Handle: RePEc:ris:integr:0550
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    Citations

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    Cited by:

    1. Frank Iyekoretin Ogbeide & Hilary Kanwanye & Sunday Kadiri, 2016. "Revisiting the Determinants of Unemployment in Nigeria: Do Resource Dependence and Financial Development Matter?," African Development Review, African Development Bank, vol. 28(4), pages 430-443, December.
    2. Rashmi Ahuja, 2021. "Sectoral allocation of foreign capital inflows and skilled‐unskilled wage inequality in a developing economy: A theoretical model," Manchester School, University of Manchester, vol. 89(1), pages 86-101, January.
    3. Xiaoyu Jiang & Yangfen Chen, 2020. "The Potential of Absorbing Foreign Agricultural Investment to Improve Food Security in Developing Countries," Sustainability, MDPI, vol. 12(6), pages 1-19, March.

    More about this item

    Keywords

    Economic Reforms; Efficiency Wage and Unemployment;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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