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Pecuniary Mobility Costs in a Two-Sector Model

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Authors
Hahn, Jinsoo
Issue Date
1996
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 9 (No. 2 1996): 163-174
Keywords
pecuniary cost; two-sector model
Abstract
This paper develops a dynamic model of the labor market with a union sector and a nonunion sector in which workers who switch sectors have to bear pecuniary mobility costs. With pecuniary costs of workers, there exists a range of equilibria. And the size of the equilibrium range positively depends on pecuniary costs. When a shock is small, workers do not migrate and the wage rate alone absorbs the effects of the shock. The model also shows that a favorable spot sector-specific shock can increase not only unemployment but wage rates and that the economy needs more time to fully accomplish the adjustment process in response to a shock due to pecuniary mobility costs.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/1081
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.09(2) (Summer 1996)
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