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Unformatted text preview: ILRIC 635 Lecture 11 Read for Wed – Corporate Engagement, Stiglitz: chapter 7 Read for Mon – Gramlich: 1-8, 30-33, 41-45, Stiglitz: chapter 3 Harris-Tudaro model works under the assumption that there is not preferential hiring If education is introduced as a form of preferential hiring: Unemp 200 100 300 1000 L ed- Education creates human capital – educated person is known to get the job first o The equilibrium at first only comes for uneducated (expected value) o After 100 people are educated, educated then judge expected value- Educated people sometimes use education to get jobs uneducated people can do o Therefore, to educate the 102 nd person may not pay off for society If informal sector is introduced to the Harris-Tudaro model, unemployment falls- Provides people with an income, and locates them near high paying jobs- Reduce chance at high paying jobs, because not searching full time Informality – jobs without the protections provided for by formal jobs- Also, can be seen as the employer’s firm has 5 or fewer employees...
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This note was uploaded on 04/14/2008 for the course ILRIC 4350 taught by Professor Fieldsg during the Spring '08 term at Cornell.
- Spring '08