The Labor Market and Economic Adjustment

98 Pages Posted: 15 Feb 2006

See all articles by Pierre-Richard Agenor

Pierre-Richard Agenor

University of Manchester - School of Social Sciences

Date Written: November 1995


This paper examines the role of the labor market in the transmission process of adjustment policies in developing countries. It begins by reviewing the recent evidence regarding the functioning of these markets. It then studies the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies. The effect of labor market reforms on economic flexibility and the channels through which labor market imperfections alter the effects of structural adjustment measures are discussed next. The last part of the paper identifies a variety of issues that may require further investigation, such as the link between changes in relative wages and the distributional effects of adjustment policies.

JEL Classification: E24, J23, J42

Suggested Citation

Agenor, Pierre-Richard, The Labor Market and Economic Adjustment (November 1995). IMF Working Paper, Vol. , pp. 1-98, 1995. Available at SSRN:

Pierre-Richard Agenor (Contact Author)

University of Manchester - School of Social Sciences ( email )

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