Minimum wage, trade and unemployment in general equilibrium

Marjit, Sugata; Ganguly, Shrimoyee; Acharyya, Rajat

doi:10.1111/ijet.12264

Cited by 13 publications

(11 citation statements)

References 18 publications

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“…We analyse these issues theoretically through adopting a general equilibrium structure of a small open economy, developed in Jones and Marjit (1992), Marjit and Beladi (1999) and Marjit et al (2020), displaying diverse trade pattern with a skilled-based and an unskilled-labour-produced export good each and an import-competing good. The skill-based export good is quality-differentiated, whereas the other export good and the import-competing good are homogeneous traded goods, similar to the case in Acharyya and Jones (2001).…”

Section: Introductionmentioning

confidence: 99%

Emigration, Tax on Remittances and Export Quality

Ganguly

Acharyya

2021

South Asian Journal of Macroeconomics and Public Finance

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We examine the implications of the emigration of unskilled workers for the quality of a skill-based good exported by a small open economy. This issue is relevant in the context of quality constraints faced by the developing countries like China and India in promoting their exports, on the one hand, and the significantly large emigrations of workers, particularly unskilled workers, which lower their productive capacities, on the other hand. We show that even though unskilled workers are not directly used in the production of quality-differentiated export goods, their emigration would lower export quality when quality upgradation requires more intensive use of skilled workers relative to capital. This result follows from the complementarity between skilled and unskilled wages in a competitive general equilibrium model. A quality-content production subsidy in such a case can mitigate the adverse effects of emigration. The significantly large remittances received from unskilled emigrants create scope for taxing such remittances to finance the subsidy. JEL Classification: F16, F20, F22, F24

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Section: Introductionmentioning

confidence: 99%

Emigration, Tax on Remittances and Export Quality

Ganguly

Acharyya

2021

South Asian Journal of Macroeconomics and Public Finance

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“…As capital is the main production factor in this article, such an extension can help to identify a new mechanism that reveals how appropriation affects the rural sector. Under such a setting, the model can be characterised with the features of the Heckscher-Ohlin model and the specific-factors model at the same time (see Deardorff, 1984;Gilbert et al, 2022;Gruen & Corden, 1970;Jones & Marjit, 1992;Krueger, 1977;Marjit et al, 2021). Therefore, we can obtain more interesting implications of appropriation on unemployment and rural-urban migration.…”

Section: Agricultural Sector Employing Labour and Capitalmentioning

confidence: 99%

Appropriation, migration, and unemployment

Duan

2023

Australian Economic Papers

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This article builds general equilibrium models to explore the relationship among appropriation, rural–urban migration, the minimum wage and unemployment. We find that the proportion of appropriated capital plays a key role in the effects of appropriation on unemployment and rural–urban migration. When the proportion of appropriated capital is large, a stronger control on appropriation by the government results in a lower unemployment rate and more rural–urban migrants, and vice versa. In the extended models, the conclusion may be different when the plundered factor changes from capital to land. In the situation with the agricultural sector employing unskilled labour and capital, appropriation has no impact on unemployment, and the effect on migration remains the same. We also discuss the implications of the minimum wage, and find that under plausible conditions, the rise of the minimum wage can alleviate appropriation and reduce unemployment. The situation of migration is ambiguous due to the impacts of two opposite factors.

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“…In the present paper we have considered the impact of inward looking policies on employment in a trade theoretic general equilibrium framework. Our paper is also related to the recent work of Marjit, Ganguly and Acharyya (2020), though the focus of the present paper is widely different from the abovementioned paper. 3 Under general equilibrium we have considered multi-sector Specific Factor, Heckscher-Ohlin (H-O) and a hybrid of the two models.…”

Section: Introductionmentioning

confidence: 99%

Inward‐looking policies, finite change, and employment: The capital reallocation effect

Marjit

Gupta

2022

Int J of Economic Theory

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It is well recognized that there emerged a trend of inward looking trade policies even before COVID pandemic crippled the world. These were reflected in both BREXIT and US-China trade conflict. As countries become inward oriented, usually local prices start rising. With this backdrop this paper explores how rising local prices are likely to affect employment in the short and long run when we accommodate for finite change in a general equilibrium structure whereby sectors not only contract but might close down altogether due to capital reallocation effect following a price incentive. Mechanisms behind employment increase are very much different between the short and the long run. We discuss such mechanisms and results in a variety of structures essentially highlighting the significance of the extensive margin, targeted protection and nontraded good.

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Minimum wage, trade and unemployment in general equilibrium

Cited by 13 publications

References 18 publications

Emigration, Tax on Remittances and Export Quality

Emigration, Tax on Remittances and Export Quality

Appropriation, migration, and unemployment

Inward‐looking policies, finite change, and employment: The capital reallocation effect

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