Globalization, Agro-Based Industry and Unemployment: A Three-Sector General Equilibrium Model

Abstract

This paper explains how different interconnected measures of globalization, namely, tariff reform, labour market reform and capital account liberalization influence different sectors of the economy, unemployment and flexible wage of unskilled labour in the informal sector. In so doing we depart from the conventional Harris-Todaro type of model of open urban unemployment. The different comparative static exercises performed in a three-sector general equilibrium clearly indicate that globalization is not a panacea for the multitude of problems of an emerging market economy.JEL Classification- E26, F16