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Equilibria with Unemployment in Segmented Labor Markets
Author:
Mr. Dimitri G Demekas
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Series:
IMF Working Papers
Volume/Issue:
Volume 1990: Issue 032
Language:
English
Publication Date:
01 Apr 1990
DOI:
https://doi.org/10.5089/9781451979602.001
ISBN:
9781451979602
ISSN:
1018-5941
Pages:
20
Keywords:
WP; primary market
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The paper proves four theorems in an n-sector model of a segmented labor market, with search costs, and a continuum of workers with different reservation wages, who can apply to any number of sectors. The main conclusions are that: (i) an equilibrium with unemployment always exists; and (ii) some of the unemployment is involuntary, in the sense that it consists of workers with reservation wages below the equilibrium wage in the secondary market. These conclusions hold in the case of both separate and non-separate markets.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund