Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/128677
Authors: 
Kratena, Kurt
Year of Publication: 
2000
Series/Report no.: 
WIFO Working Papers 128
Abstract: 
In this study a two sector general equilibrium model with fully integrated labour and goods markets is presented. The two labour markets are segmented and represent two different "labour market regimes". The primary sector is an unionized high wage sector with "good" and rationed jobs, in the secondary sector the wage rate is given by a competitive labour market with "bad" jobs. Mobility between the two sectors takes place as in the Harris-Todaro model of migration depending on expected wage income in a sector. Goods demand depends on real household (workers) income and on relative prices given by unit costs. A simulation experiment shows that an ex ante aggregate neutral demand shift from the secondary to the primary sector might have a positive impact on aggregate unemployment, while a demand shift from the primary to the secondary sector could have a negative impact.
Subjects: 
demand shift hypothesis
general equilibrium
labour mobility
sectoral wages and unemployment
JEL: 
J64
J31
D58
Document Type: 
Working Paper

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