Labor market distortions in major emerging-market economies: Some CGE estimates
Purpose ― In the present study, the effects of labor market distortions on economic structure and efficiency are estimated for seven emerging-market countries: Brazil, China, Indonesia, India, Mexico, Russia, and Turkey. Methods ― The estimates are based on a computable equilibrium (CGE) model tha...
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Universitas Islam Indonesia
2023-10-01
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| Series: | Economic Journal of Emerging Markets |
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| Online Access: | https://journal.uii.ac.id/JEP/article/view/30044 |
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| author | Pablo R. Liboreiro |
| author_facet | Pablo R. Liboreiro |
| author_sort | Pablo R. Liboreiro |
| collection | DOAJ |
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Purpose ― In the present study, the effects of labor market distortions on economic structure and efficiency are estimated for seven emerging-market countries: Brazil, China, Indonesia, India, Mexico, Russia, and Turkey.
Methods ― The estimates are based on a computable equilibrium (CGE) model that allows simulation of the inter-industry links of 56 industries plus a sector representing the rest of the world from data collected in the World Input-Output Database (Release 2016) for the period 2000-2014.
Findings ― The results show that wage differentials appear to be distortionary, especially in the cases of countries with high wage-income inequality. Moreover, it seems that labor market distortions in emerging-market countries are subject to the rural-urban dichotomy and urban labor-market imperfections. Finally, the results show that the removal of wage differentials affects the terms of trade, which are improved in most but not all cases.
Implication ― The conclusions of the present study have policy implications. In countries where the rural-urban dichotomy is the main distortion in labor markets, increasing urbanization can stimulate efficiency; when this is not the case, further reform of urban labor markets is needed. However, it cannot be ruled out in advance that a policy aimed at enhancing labor mobility may have a negative impact on the terms of trade.
Originality ― The estimation method used in the present study presents certain advances over others found in the literature, as it becomes possible to estimate the effects of labor-market distortions while considering the interdependencies between different sectors, as well as to plausibly estimate the effects on trade. The present study also uses a large quantity of data, which is expected to add robustness to the study’s conclusion.
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| format | Article |
| id | doaj-art-7a252a3a1eb1493cb80875a9e5f8bb0f |
| institution | Kabale University |
| issn | 2086-3128 2502-180X |
| language | English |
| publishDate | 2023-10-01 |
| publisher | Universitas Islam Indonesia |
| record_format | Article |
| series | Economic Journal of Emerging Markets |
| spelling | doaj-art-7a252a3a1eb1493cb80875a9e5f8bb0f2025-08-20T03:44:01ZengUniversitas Islam IndonesiaEconomic Journal of Emerging Markets2086-31282502-180X2023-10-01152Labor market distortions in major emerging-market economies: Some CGE estimatesPablo R. Liboreiro0School of Civil Engineering, Technical University of Madrid, Madrid, Spain Purpose ― In the present study, the effects of labor market distortions on economic structure and efficiency are estimated for seven emerging-market countries: Brazil, China, Indonesia, India, Mexico, Russia, and Turkey. Methods ― The estimates are based on a computable equilibrium (CGE) model that allows simulation of the inter-industry links of 56 industries plus a sector representing the rest of the world from data collected in the World Input-Output Database (Release 2016) for the period 2000-2014. Findings ― The results show that wage differentials appear to be distortionary, especially in the cases of countries with high wage-income inequality. Moreover, it seems that labor market distortions in emerging-market countries are subject to the rural-urban dichotomy and urban labor-market imperfections. Finally, the results show that the removal of wage differentials affects the terms of trade, which are improved in most but not all cases. Implication ― The conclusions of the present study have policy implications. In countries where the rural-urban dichotomy is the main distortion in labor markets, increasing urbanization can stimulate efficiency; when this is not the case, further reform of urban labor markets is needed. However, it cannot be ruled out in advance that a policy aimed at enhancing labor mobility may have a negative impact on the terms of trade. Originality ― The estimation method used in the present study presents certain advances over others found in the literature, as it becomes possible to estimate the effects of labor-market distortions while considering the interdependencies between different sectors, as well as to plausibly estimate the effects on trade. The present study also uses a large quantity of data, which is expected to add robustness to the study’s conclusion. https://journal.uii.ac.id/JEP/article/view/30044Emerging Marketslabour market distortionsinput-outputComputable General Equilibrium (CGE) Model |
| spellingShingle | Pablo R. Liboreiro Labor market distortions in major emerging-market economies: Some CGE estimates Economic Journal of Emerging Markets Emerging Markets labour market distortions input-output Computable General Equilibrium (CGE) Model |
| title | Labor market distortions in major emerging-market economies: Some CGE estimates |
| title_full | Labor market distortions in major emerging-market economies: Some CGE estimates |
| title_fullStr | Labor market distortions in major emerging-market economies: Some CGE estimates |
| title_full_unstemmed | Labor market distortions in major emerging-market economies: Some CGE estimates |
| title_short | Labor market distortions in major emerging-market economies: Some CGE estimates |
| title_sort | labor market distortions in major emerging market economies some cge estimates |
| topic | Emerging Markets labour market distortions input-output Computable General Equilibrium (CGE) Model |
| url | https://journal.uii.ac.id/JEP/article/view/30044 |
| work_keys_str_mv | AT pablorliboreiro labormarketdistortionsinmajoremergingmarketeconomiessomecgeestimates |