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| Title: | Monopsonistic Competition in Formal and Informal Labor Markets |
| Authors: | Ted, To |
| Keywords: | competition, labor markets |
| Issue Date: | 11-Sep-2007 |
| Series/Report no.: | IPC Working Paper Series No. 33 |
| Abstract: | The workhorse of urban labor theory in development economics is
the formal/informal model of labor market segmentation and its variants.
A key prediction of the competitive theory of formal and informal
labor markets is that if labor costs in the formal market increase, formal
market employers lay off workers who move to the informal market, increasing
informal labor supply and depressing informal market wages.
However, there is considerable evidence that suggests that higher wages
in the formal labor market are often associated with higher wages in
the informal market. While it is possible to augment the standard
theory to yield results consistent with this apparent inconsistency I
choose instead to depart from the usual competitive framework. In
particular, I consider the theory of formal and informal labor markets
under oligopsony/monopsonistic competition. |
| Appears in Collections: | International Policy Center - Working Paper Series
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| IPC-working-paper-033-To.pdf | | 147Kb | Adobe PDF | View/Open |
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