This paper investigates how devaluation by a small open economy affects its export quality when higher quality requires more of skilled labour and capital; and the ramifications of such quality changes on employment of unskilled labour and real income. In a competitive general equilibrium...

This paper examines the employment effect of devaluation in a model with a nontraded good and a black market for foreign exchange. The disaggregative approach reveals, in contrast to an earlier one-sector analysis, that overall employment may change even if the exchange control is such that...