In this paper we extend the benchmark model of Diamond-Mortensen-Pissarides in a two-sector general equilibrium framework by introducing a frictionless segment of the labour market. The two sectors are the frictionless informal sector and the frictional formal sector where match friction is the...

In this paper we introduce efficiency wage relation in the benchmark model of DMP where worker’s efficiency depends on the wage rate and the labour market tightness. We also examine the parametric effects on the Nash-wage rate, market tightness and on the equilibrium unemployment rate. Our...

This paper incorporates informal sector and efficiency wage relation in a Harris-Todaro econmy under differential production structure. The simultaneous existence of the urban informal sector and the urban unemployment has been explained interms of such efficiency wage relation. Two different...

We consider a small open Harris-Todaro (1970) economy complementing global exposure, informal labour training and the urban unemployment. Workers acquire skills through apprenticeship training in the urban informal sector. The informal employers are motivated to train the apprentices by the...

In this paper we examine different types of labour policies in the benchmark model of DMP in both cases where job-destruction rate is exogenous and endogenous. Our theoretical results show that the labour market tightness and the unemployment rate would be more volatile if job-destruction is...

The present paper develops a three sector Harris-Todaro (1970) type general equilibrium model of unemployment by incorporating endogenous skill formation. Two types of labour are considered: skilled labour and un-skilled labour. We examine the effects of the inflows of foreign capital on the...

In this paper we extend the benchmark model of Diamond-Mortensen-Pissarides in a two-sector general equilibrium framework by introducing a frictionless segment of the labour market. The two sectors are the frictionless informal sector and the frictional formal sector where match friction is the...

In this paper we introduce efficiency wage relation in the benchmark model of DMP where worker’s efficiency depends on the wage rate and the labour market tightness. We also examine the parametric effects on the Nash-wage rate, market tightness and on the equilibrium unemployment rate. Our...

The purpose of this paper is to extend the Fields’ (1989) multi sector job-search model in a three sector general equilibrium framework by introducing international trade and an input, capital. The three sectors are the rural sector, the urban informal sector and the urban formal sector. The...

We extend the benchmark model of DMP in a two-sector general equilibrium framework by introducing a frictionless segment of the labour market. We also examine the effects of trade reforms and labour market reforms on equilibrium rate of unemployment and wage inequality in our stylitzed economy....