Labor Market Representation in Quantitative Macroeconomic Models for Developing Countries: An Application to Cote D'Ivoire


Vincent Bodart ; Jean Le Dem

Publication Date:

August 1, 1995

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate


This paper presents a quantitative macroeconomic model that accounts for key features of the labor market in developing countries. Primarily inspired by Côte d’Ivoire, the model contrasts a formal urban sector, where wages are rigidly fixed and employment is submitted to firms profit-seeking behavior, to urban and rural informal sectors, where wages are flexible and employment is affected by fluctuations in formal sector employment. Dynamic simulations assess the impact on key macroeconomic variables of a terms of trade improvement, a public wage decrease, and an exchange rate adjustment, highlighting the roles of rural-urban migrations and capital accumulation in the informal urban sector.


Working Paper No. 1995/087



Also published in Staff Papers, Vol. 43, No. 2, June 1996.


Publication Date:

August 1, 1995



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