TY  - RPRT
        AU  - Basu, Arnab K.
AU  - Chau, Nancy H.
AU  - Fields, Gary S.
AU  - Kanbur, Ravi
        TI  - Job Creation in a Multi-Sector Labor Market Model for Developing Economies
        PY  - 2016/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 9972
        UR  - https://www.iza.org/index.php/publications/dp9972
        AB  - This paper proposes an overlapping generations multi-sector model of the labor market for developing countries with three heterogeneities – heterogeneity within self-employment, heterogeneity in ability, and heterogeneity in age. We revisit an iconic paradox in a class of multi-sector labor market models in which the creation of high-wage employment exacerbates unemployment. Our richer setting allows for generational differences in the motivations for job search to be reflected in two distinct inverted U-shaped relationships between unemployment and high-wage employment, one for youth and a different one for adults. In turn, the relationship between overall unemployment and high-wage employment is shown to be non-monotonic and mult-peaked.
The model also sheds light on the implications of increasing high-wage employment on self-employed workers, who make up most of the world's poor. Non-monotonicity in unemployment notwithstanding, increasing high-wage employment has an unambiguous positive impact on high-paying self-employment, and an unambiguous negative impact on free-entry (low-wage) self-employment.
        KW  - poverty reduction
KW  - overlapping generations
KW  - multisector labor market
KW  - Harris‐Todaro model
        ER  -