Wage Compression, Employment Restrictions and Unemployment: The Case of Mauritius

November 1, 2004

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Wage Compression, Employment Restrictions and Unemployment: The Case of Mauritius, (USA: International Monetary Fund, 2004) accessed December 4, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Governments often intervene in labor markets with the aim of reducing inequality and promoting employment. Such intervention often results in wage compression and restrictions on how firms use their workers. This paper investigates the impact of such interventions on the labor market conditions faced by low-skill workers in Mauritius. It finds that even relatively minor intervention can dramatically increase the fragility of jobs, the length of unemployment spells, as well as the extent of unemployment and labor market churning. With institutions of the type studied here common across many different types of countries, these results have relatively general implications.

Subject: Job destruction, Labor, Labor markets, Unemployment, Wage compression, Wages

Keywords: Determination process, Dislocation cost, Equilibrium wage function, Job creation, Job destruction, Labor Market Restrictions, Labor markets, Low-skill worker, Quality firm-worker match, Unemployment, Wage Compression, Wage distribution, Wages, Western Europe, Worker redeployment, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/205
Stock No:

WPIEA2052004
ISBN:

9781451874587
ISSN:

1018-5941

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