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Skills, Informality and Development

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  • Dibyendu S. Maiti

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  • Arup Mitra

    ()

Abstract

This paper makes an attempt to estimate the index of informal sector employment which can be attributed to the supply-push phenomenon. Factors which explain the inter-state variations include the industrial-informal sector wage gap, revenue expenditure, and development expenditure incurred by the government. Increased development expenditure brings in a decline in distress-led informalization. With improved education, health, and infrastructure facilities the employability of an individual goes up, which, in turn, reduces the compulsion to get absorbed residually. However, expansion in government activities measured through increased revenue expenditure raises in-migration, which in turn raises the supply-push phenomenon. We also observed that with an increase in distress-led informalization inequality tends to rise. Adoption of labour intensive technology in the organized industrial sector is indeed crucial for pro-poor growth. The other policy implication is in terms of enhanced investment in the areas of education, health and other infrastructural facilities.

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Bibliographic Info

Paper provided by eSocialSciences in its series Working Papers with number id:3115.

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Date of creation: Nov 2010
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Handle: RePEc:ess:wpaper:id:3115

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Keywords: Informal sector; informal sector employment ; supply-push; development expenditure; stochastic frontier; infrastructure; employability; labour-intensive technology; informalisation; informalization; pro-poor growth; Labour Studies; Economics; Labour Economics;

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  1. Dilip Mookherjee & Stefan Napel & Debraj Ray, 2008. "Aspirations, Segregation and Occupational Choice," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series, Boston University - Department of Economics dp-182, Boston University - Department of Economics.
  2. Dibyendu Maiti & Sugata Marjit, 2008. "Trade liberalization, production organization and informal sector of the developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(3), pages 453-461.
  3. Koujianou Goldberg, Pinelopi & Pavcnik, Nina, 2003. "The response of the informal sector to trade liberalization," Journal of Development Economics, Elsevier, Elsevier, vol. 72(2), pages 463-496, December.
  4. Marjit, Sugata, 2003. "Economic reform and informal wage--a general equilibrium analysis," Journal of Development Economics, Elsevier, Elsevier, vol. 72(1), pages 371-378, October.
  5. Sugata Marjit & Amit K. Biswas, 2011. "Informality, Corruption and Trade Reform," Trade Working Papers 22896, East Asian Bureau of Economic Research.
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Cited by:
  1. Savita Bhat & N S Siddharthan, 2010. "Human Capital, Labour Productivity and Employment," Working Papers id:3110, eSocialSciences.

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