Article ID Journal Published Year Pages File Type
5084145 International Review of Economics & Finance 2009 10 Pages PDF
Abstract
Labor markets in developing economies may be afflicted by a multiplicity of interacting distortions. We consider a general equilibrium model of an economy distorted by both sector-specific sticky wages and imperfect mobility of labor. In this framework, we contrast the implications of capital accumulation in the short and long run. We show that, in contrast to both the case in the absence of a sector-specific sticky wage and the case in the absence of imperfect labor mobility, the short and long-run effects of growth on the economic system converge as the degree of labor mobility is limited.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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