Dynamic analysis of a disequilibrium macroeconomic model with dual labor markets

Abstract

We extend the general disequilibrium model of Malinvaud (1980) by using dual labor market theory. By considering two tiers of workers, we find that while the duality of the labor market expands an equilibrium regime in the short term, it does not always keep an equilibrium in the medium term. In the medium term, the business cycle converges toward a disequilibrium regime unless the goods market is potentially in equilibrium. Employment and wages at the steady state are affected by the size of the government expenditure, and the stability of wage bargaining is only a sufficient condition of the local stability of our dynamic system. Therefore, involuntary unemployment can be remedied only when goods demand is sufficiently large.

Impact of the Main Threats from COVID-19 on the Labor Market in the Context of Ensuring Economic Security

“…The labor market is very diverse and all its aspects in one way or another affect the issues of socio-economic development and ensuring economic security. Many scientists carry out this thesis through their scientific works [5][6][7][8].…”

Labor Market Discrimination – Are Women Still More Secondary Workers?

“…In the view of critics of such an approach, it leads to problems with explaining discrimination and monopolies on the labor market and to unemployment (Hall, 1972). The dual labor market theory (Dickens & Lang, 1985;Ogawa, 2019;Wachter, 1972) is based on assumptions that are alternative, but not necessarily contrary to the neoclassical theory. This theory assumes that economy covers two different sectors: primary and secondary sector.…”

“…Primary workers are employed for fixed wages, while their employment is determined by the demand on the property market. Secondary workers are employed on the competitive market and their market is always in balance (Ogawa, 2019).…”

“…Segmentation is a well-documented in empirical studies phenomenon occurring on the labor market (Blanchard et al, 1990;Dickens & Lang, 1985;Eichhorst et al, 2017;McDonald & Solow, 1985;Ogawa, 2019;Osterman, 1985;Jung & Cho, 2020;Pascall, 2008). Although changes in factors generating segmentation are observed, the very phenomenon does not disappear.…”

“…However, these stabilizing effects may concern only a short period, not necessarily the medium one. Duality may overcome barriers resulting from price hardening in economy, but does not automatically ensure overcoming the barrier of effective demand on the property market (Ogawa, 2019). From the point of view of economic results, but also economic policy, it is also important whether segmentation results from the factors related to labor productivity (e.g.…”