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Compliance with the Institutional Wage in Dualistic Models

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  • Ana Paula Martins
Abstract
This research extends simple two-sector models in order to inquire the impact of the extent of coverage or enforcement of minimum wage legislation in one of the sectors on the equilibrium outcome. Two versions of institutional wage avoidance are presented. They may be seen as representing different institutional detection rules: one working through worker complaint, the other through firm sampling inspection (and enforcement) by the legal system. Both cases are modelled as enlargements of two dualistic models: Harris-Todaro (the wage in the other sector is market determined) and Bhagwati-Hamada (the wage in the other sector is institutionally fixed and coverage is complete). Impact on population flows of changes in degree of coverage (compliance) is also confronted with the effect of a change in the institutional wage for each scenario.

Suggested Citation

  • Ana Paula Martins, 2011. "Compliance with the Institutional Wage in Dualistic Models," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 54(2), pages 93-126.
    • Handle: RePEc:eei:journl:v:54:y:2011:i:2:p:93-126
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    14. Martins, Ana Paula, 2008. "Bilateral mobility in dualistic models," Economic Modelling, Elsevier, vol. 25(3), pages 391-410, May.
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    28. Ana Paula Martins, 2011. "Segmented Life-cycle Labor Markets – Portuguese Evidence," EERI Research Paper Series EERI_RP_2011_05, Economics and Econometrics Research Institute (EERI), Brussels.
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    31. Ana Paula Martins, 2006. "On Simple Conditions for Mixed Equilibria in Dualistic Models. Part I: Degree of Mobility," EERI Research Paper Series EERI_RP_2006_03, Economics and Econometrics Research Institute (EERI), Brussels.
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    Cited by:

    1. William H. Greene & Ana P. Martins, 2013. "Striking Features of the Labor Market: Empirical Evidence," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 56(2), pages 25-53.
    2. Ana Paula Martins, 2011. "Compliance with the Institutional Wage in Dualistic Models," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 54(2), pages 93-126.
    3. William H. Greene & Ana P. Martins, 2013. "Striking Features of the Labor Market: Theory," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 56(2), pages 1-24.
    4. William H. Greene & Ana P. Martins, 2002. "Striking Features of the Labor Market," EERI Research Paper Series EERI RP 2002/08, Economics and Econometrics Research Institute (EERI), Brussels.

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    More about this item

    Keywords

    Migration; Mobility; Minimum Wages; Segmented Labor Markets; Informal Sector; Regional Labor Markets; Dualistic Models; Coverage.;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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