lynx   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ulp/sbbeta/2012-04.html
   My bibliography  Save this paper

Currency devaluation with dual labor market : Which perspectives for the Euro Zone ?

Author

Listed:
  • Amélie Barbier-Gauchard
  • Francesco De Palma
  • Giuseppe Diana
Abstract
In this paper, we assume a world of two countries in a fixed exchange rate system. The main difference between the two countries lies in the features of their labor markets. In the home country, we assume the existence of a dual labor market, with formal and informal sectors. In the foreign country, the labor market is homogeneous and characterized by a nominal wage rigidity. In this context, the situation of labor market in each country is not optimal through a misallocation of workers between sectors in domestic economy, and unemployment in foreign economy. Our article shows that a devaluation of domestic currency implies a fall in production in each country, an increase in unemployment in foreign economy and a worse reallocation of workers by a growth of informal sector in domestic economy.

Suggested Citation

  • Amélie Barbier-Gauchard & Francesco De Palma & Giuseppe Diana, 2012. "Currency devaluation with dual labor market : Which perspectives for the Euro Zone ?," Working Papers of BETA 2012-04, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2012-04
    as

    Download full text from publisher

    File URL: http://beta.u-strasbg.fr/WP/2012/2012-04.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    2. Claudia Curi & Cinzia Daraio & Patrick Llerena, 2012. "University technology transfer: how (in)efficient are French universities?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 36(3), pages 629-654.
    3. David Cook & Hiromi Nosaka, 2006. "Dual labor markets and business cycles," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.
    4. Olivier Cardi & Romain Restout, 2014. "Unanticipated vs. Anticipated Tax Reforms in a Two-Sector Open Economy," Open Economies Review, Springer, vol. 25(2), pages 373-406, April.
    5. Kai Christoffel & Keith Kuester & Tobias Linzert, 2006. "Identifying the Role of Labor Markets for Monetary Policy in an Estimated DSGE Model," 2006 Meeting Papers 544, Society for Economic Dynamics.
    6. Konstantinos POULIAKAS & Ioannis THEODOSSIOU, 2010. "Differences in the job satisfaction of high-paid and low-paid workers across Europe," International Labour Review, International Labour Organization, vol. 149(1), pages 1-29, March.
    7. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    8. Mattesini, Fabrizio & Rossi, Lorenza, 2009. "Optimal monetary policy in economies with dual labor markets," Journal of Economic Dynamics and Control, Elsevier, vol. 33(7), pages 1469-1489, July.
    9. Barry Eichengreen, 2010. "The Breakup of the Euro Area," NBER Chapters, in: Europe and the Euro, pages 11-51, National Bureau of Economic Research, Inc.
    10. Hazans, Mihails, 2011. "Informal Workers across Europe: Evidence from 30 Countries," IZA Discussion Papers 5871, Institute of Labor Economics (IZA).
    11. Dimitri G. Demekas, 1990. "Labor Market Segmentation in a Two-Sector Model of an Open Economy," IMF Staff Papers, Palgrave Macmillan, vol. 37(4), pages 849-864, December.
    12. Russell COOPER, 2012. "Exit from a Monetary Union through Euroization: Discipline without chaos," Economics Working Papers ECO2012/09, European University Institute.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cardi, Olivier & Restout, Romain, 2015. "Fiscal Shocks In A Two-Sector Open Economy With Endogenous Markups," Macroeconomic Dynamics, Cambridge University Press, vol. 19(8), pages 1839-1865, December.
    2. Raphaële Préget & Phu Nguyen-Van & Marc Willinger, 2016. "Who are the voluntary leaders? Experimental evidence from a sequential contribution game," Theory and Decision, Springer, vol. 81(4), pages 581-599, November.
    3. Julien Pénin, 2012. "Motivation crowding-out: Is there a risk for science?," Working Papers of BETA 2012-13, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Amélie Barbier-Gauchard & Francesco de Palma & Giuseppe Diana, 2013. "Why could Northern labor market flexibility save the eurozone?," Working Papers of LaRGE Research Center 2013-08, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    5. Ragip Ege & Herrade Igersheim & Charlotte Le Chapelain, 2016. "Transcendental vs. comparative approaches to justice: a reappraisal of Sen's dichotomy," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 23(4), pages 521-543, August.
    6. Cohendet Patrick & Llerena Patrick & Simon Laurent, 2014. "The Routinization of Creativity: Lessons from the Case of a Video-game Creative Powerhouse," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 120-141, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Barbier-Gauchard, Amélie & De Palma, Francesco & Diana, Giuseppe, 2014. "Why should Southern economies stay in the Euro Zone? The role of labor markets," Economic Modelling, Elsevier, vol. 43(C), pages 201-208.
    2. Raphaële Préget & Phu Nguyen-Van & Marc Willinger, 2016. "Who are the voluntary leaders? Experimental evidence from a sequential contribution game," Theory and Decision, Springer, vol. 81(4), pages 581-599, November.
    3. Cohendet Patrick & Llerena Patrick & Simon Laurent, 2014. "The Routinization of Creativity: Lessons from the Case of a Video-game Creative Powerhouse," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 120-141, April.
    4. Hazans, Mihails, 2011. "Informal Workers across Europe: Evidence from 30 Countries," IZA Discussion Papers 5871, Institute of Labor Economics (IZA).
    5. Agenor, Pierre-Richard & Aizenman, Joshua, 1999. "Macroeconomic adjustment with segmented labor markets," Journal of Development Economics, Elsevier, vol. 58(2), pages 277-296, April.
    6. Julien Pénin, 2012. "Motivation crowding-out: Is there a risk for science?," Working Papers of BETA 2012-13, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    7. Amélie Barbier-Gauchard & Francesco de Palma & Giuseppe Diana, 2013. "Why could Northern labor market flexibility save the eurozone?," Working Papers of LaRGE Research Center 2013-08, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    8. Cardi, Olivier & Restout, Romain, 2015. "Fiscal Shocks In A Two-Sector Open Economy With Endogenous Markups," Macroeconomic Dynamics, Cambridge University Press, vol. 19(8), pages 1839-1865, December.
    9. Oksana Nezhyvenko, 2018. "Informal Employment in Ukraine and European Union Transition Countries," Erudite Ph.D Dissertations, Erudite, number ph18-03 edited by Philippe Adair.
    10. SENBETA, Sisay Regassa, 2013. "Informality and macroeconomic fluctuations: A small open economy New Keynesian DSGE model with dual labour markets," Working Papers 2013002, University of Antwerp, Faculty of Business and Economics.
    11. Hazans, Mihails, 2011. "What explains prevalence of informal employment in European countries : the role of labor institutions, governance, immigrants, and growth," Policy Research Working Paper Series 5917, The World Bank.
    12. Koettl, Johannes & Weber, Michael, 2012. "Does Formal Work Pay? The Role of Labor Taxation and Social Benefit Design in the New EU Member States," IZA Discussion Papers 6313, Institute of Labor Economics (IZA).
    13. Davidescu, Adriana Anamaria & Schneider, Friedrich, 2017. "Nature of the Relationship between Minimum Wage and the Shadow Economy Size: An Empirical Analysis for the Case of Romania," IZA Discussion Papers 11247, Institute of Labor Economics (IZA).
    14. Ragip Ege & Herrade Igersheim & Charlotte Le Chapelain, 2016. "Transcendental vs. comparative approaches to justice: a reappraisal of Sen's dichotomy," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 23(4), pages 521-543, August.
    15. Friedrich Schneider, 2013. "Work in the Shadow: Some Facts," Economics working papers 2013-18, Department of Economics, Johannes Kepler University Linz, Austria.
    16. Schneider, Friedrich, 2014. "The Shadow Economy and Shadow Labor Force: A Survey of Recent Developments," IZA Discussion Papers 8278, Institute of Labor Economics (IZA).
    17. Schneider, Friedrich, 2012. "The Shadow Economy and Work in the Shadow: What Do We (Not) Know?," IZA Discussion Papers 6423, Institute of Labor Economics (IZA).
    18. Torgler, Benno & Schneider, Friedrich & Schaltegger, Christoph A., 2007. "With or Against the People? The Impact of a Bottom-Up Approach on Tax Morale and the Shadow Economy," Berkeley Olin Program in Law & Economics, Working Paper Series qt6331x6vz, Berkeley Olin Program in Law & Economics.
    19. Lloyd Ulman, 1992. "Why Should Human Resource Managers Pay High Wages?," British Journal of Industrial Relations, London School of Economics, vol. 30(2), pages 177-212, June.
    20. Kee, Hiau Looi & Hoon, Hian Teck, 2005. "Trade, capital accumulation and structural unemployment: an empirical study of the Singapore economy," Journal of Development Economics, Elsevier, vol. 77(1), pages 125-152, June.

    More about this item

    Keywords

    efficiency wage; dualism; exchange rate; devaluation.;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ulp:sbbeta:2012-04. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge The email address of this maintainer does not seem to be valid anymore. Please ask the person in charge to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/bestrfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.
    Лучший частный хостинг