Labor Market Representation in Quantitative Macroeconomic Models for Developing Countries: An Application to Cote D'Ivoire
August 1, 1995
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Summary
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.
Subject: Consumption, Labor, Labor force, Labor markets, National accounts, Private consumption, Wages
Keywords: Consumption, first-year price impact, GDP growth effect, goods market, gross domestic product, growth effect, import term, investment goods, Labor force, labor market, manufactured goods, nominal wage, output price, Private consumption, private sector, Sub-Saharan Africa, subsistence goods, supply response, term exp, wage rate, Wages, WP
Pages:
43
Volume:
1995
DOI:
Issue:
087
Series:
Working Paper No. 1995/087
Stock No:
WPIEA0871995
ISBN:
9781451850963
ISSN:
1018-5941
Notes
Also published in Staff Papers, Vol. 43, No. 2, June 1996.
