Ethnic Dualism and Communication Costs – Explaining Segmentation and Wage Inertia

Kalckreuth, Ulf von

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URN: urn:nbn:de:bsz:180-madoc-10186
Document Type: Working paper
Year of publication: 2000
The title of a journal, publication series: Discussion Papers / Institut für Volkswirtschaftslehre und Statistik
Volume: 593
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Institut für Volkswirtschaftslehre und Statistik > Discussion Papers
Subject: 330 Economics
Classification: JEL: D24 D33 J31 F22 ,
Subject headings (SWD): Arbeitsmarkt , Migration , Segregation <Soziologie> , Lohn
Abstract: What is the impact of international migration on the wage structure? Empirically, it is difficult to find any effect at all. This essay gives a new theoretical explanation for this conspicuous absence, emphasising non-convexities in the technology of individual firms due to communication costs. With high costs of coordination between workers, the labour force will segregate on the workshop level. In this case, the aggregate production technology has linear segments, and within certain bounds, additional labour input is absorbed without changing the relative factor prices. A local non-substitution theorem is derived.
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