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WAGE DIFFERENTIALS AND EMPLOYMENT IN A TWO‐SECTOR MODEL WITH A DUAL LABOUR MARKET
Author(s) -
Klundert Th.
Publication year - 1989
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1989.tb00452.x
Subject(s) - economics , levelling , wage , labour economics , comparative statics , efficiency wage , dual (grammatical number) , general equilibrium theory , market clearing , distribution (mathematics) , primary sector of the economy , economic sector , microeconomics , economy , art , mathematical analysis , cartography , literature , mathematics , geography
The concept of a dual labour market is analysed in a two‐sector general equilibrium model. The primary sector pays efficiency wages, while there is no connection between efficiency and the relative wage level in the secondary sector. The two sectors produce different goods. Capital is assumed sector‐specific. The results under different conditions in the labour market (market clearing, minimum wages and levelling of the wage distribution) are derived analytically. Comparative statics are discussed by applying a linearized version of the model. The outcomes may be used to explain observed differences in wage and employment distributions in the US and Europe.