Macroeconomic Policy in the Presence of an Irregular Sector

  • V. Ginsburgh
  • Ph. Michel
  • F. Padoa Schioppa
  • P. Pestieau
Part of the Studies in Contemporary Economics book series (CONTEMPORARY, volume 15)


This paper is concerned with the policy implications of the combined presence of a regular observed and an irregular unobserved sector. It develops a two-sector model in which the regular sector is subject to fixed prices and wages, while the irregular sector wages may move freely. A number of regimes are shown to be possible and for each, we examine the effects of different policies on regular and overall employment. Ignorance of the existence of an irregular sector can lead to employment policies which ultimately reduce the overall level of employment.


Wage Rate Labor Demand Aggregate Demand Excess Demand Full Employment 
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Copyright information

© Springer-Verlag Berlin Heidelberg 1985

Authors and Affiliations

  • V. Ginsburgh
    • 1
  • Ph. Michel
    • 2
  • F. Padoa Schioppa
    • 3
  • P. Pestieau
    • 4
  1. 1.Université Libre de BruxellesBrusselsBelgium
  2. 2.SorbonneParisFrance
  3. 3.Libera Universita’ Internazionale Degli Studi SocialiRomeItaly
  4. 4.University of LiègeBelgium

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