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Informal Labour and Credit Markets: A Survey

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  • Batini, Nicoletta

    (IMF and University of Surrey)

  • Kim, Young-Bae

    (University of Surrey)

  • Levine, Paul

    (University of Surrey)

  • Lotti, Emanuela

    (University of Surrey)

Abstract

This paper reviews the literature on the informal economy, focusing first on empirical findings and then on existing approaches to modelling informality within both partial and general equilibrium environments. We concentrate on labour and credit markets, since these tend to be most affected by informality. The phenomenon is particularly important in emerging and other developing economies, given their high degrees of informal labour and financial services and the implications these have for the effectiveness of macroeconomic policy. We emphasize the need for dynamic general equilibrium (DGE) and ultimately dynamic stochastic general equilibrium (DSGE) models for a full understanding of the costs, benefits and policy implications of informality. The survey shows that the literature on informality is quite patchy, and that there are several unexplored areas left for research.

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Bibliographic Info

Paper provided by National Institute of Public Finance and Policy in its series Working Papers with number 11/94.

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Length: 51
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:npf:wpaper:11/94

Note: Working Paper 94, 2011
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Web page: http://www.nipfp.org.in

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Keywords: Informal economy ; Labour market ; Search-matching models;

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References

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Cited by:
  1. Gabriel, Vasco & Levine, Paul & Pearlman, Joseph & Yang, Bo, 2011. "An Estimated DSGE Model of the Indian Economy," Working Papers 11/95, National Institute of Public Finance and Policy.
  2. Paul Castillo B. & Carlos Montoro Ll., 2012. "Inflation Dynamics in the Presence of Informal Labour Markets," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 15(1), pages 4-31, April.
  3. Levine, Paul, 2010. "Monetary policy in an uncertain world: Probability models and the design of robust monetary rules," Working Papers 10/72, National Institute of Public Finance and Policy.
  4. Nicoletta Batini & Paul Levine & Emanuela Lotti, 2011. "The Costs and Benefits of Informality," School of Economics Discussion Papers 0211, School of Economics, University of Surrey.
  5. Adnan Haider & Musleh ud Din & Ejaz Ghani, 2012. "Monetary Policy, Informality and Business Cycle Fluctuations in a Developing Economy Vulnerable to External Shocks," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 51(4), pages 609-682.
  6. Nicoletta Batini & Paul Levine & Emanuela Lotti & Bo Yang, 2011. "Informality, Frictions and Monetary Policy," School of Economics Discussion Papers 0711, School of Economics, University of Surrey.
  7. Batini, Nicoletta & Levine, Paul & Lotti, Emanuela & Yang, Bo, 2011. "Monetary and Fiscal Policy in the Presence of Informal Labour Markets," Working Papers 11/97, National Institute of Public Finance and Policy.

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