Economic theory would anticipate that labor market distortions ...

[Shelles]

Economic theory would anticipate that labor market distortions would reduce employment. Why isn't there greater evidence of this in developing countries?
 
  What will be an ideal response?

Question 2

What economic benefits might a developing country gain by reducing corruption? Discuss only economic benefits and provide examples from specific developing countries.
 
  What will be an ideal response?

[braelync]

Answer to Question 1

The answer would focus on the imperfection of labor markets even without regulations, so that the impact of those regulations (e.g. the minimum wage) might not reduce employment. Also the ability to evade regulations could be mentioned.

Answer to Question 2

The student is asked to describe the economic benefits of reducing corruption. These include the growth enhancing effects described in the text and illustrated in Figure 11.3 for Ecuador. The text notes that the burden of corruption falls disproportionately on the poor so combating corruption could couple as a poverty reduction strategy.

[Shelles]

Thanks for the timely response, appreciate it

[okolip]

Gracias!