We consider a heterogenous labor market in a two-country monetary union. The domestic economy is characterized by a dual labor market with formal and informal sectors as observed in most Southern EMU economies. Among formal workers, wage-levels result from eciency considerations. In the foreign...

In this paper, we assume a world of two countries in a fixed exchange rate system. The main difference between the two countries lies in the features of their labor markets. In the home country, we assume the existence of a dual labor market, with formal and informal sectors. In the foreign...

We consider a segmented labor market characterized by a Shapiro-Stiglitz efficiency wage setting in both sectors. However, the primary sector and the secondary sector differ in the firing cost which induces a wage diffential. We suppose also a heterogeneous labor force characterized by the...