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Recession in the Skilled Sector and Implications for Informal Wage

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  • Marjit, Sugata
  • Chaudhuri, Sarbajit
  • Kar, Saibal

Abstract

Global recession is likely to hit the skilled sector or the so-called white goods, white collared sector in a typical developing economy. In this paper we try to analyze the impact of such an event on informal wage as the vast majority of the workforce in the developing world is employed in the unorganized or informal sector. In particular, we demonstrate the analytical possibility that a recession in the skilled sector will actually increase real informal wage.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18003.

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Date of creation: 30 Apr 2009
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Handle: RePEc:pra:mprapa:18003

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Keywords: Recession; skill; capital-labor ratio; informal wage; general equilibrium;

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References

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  1. Brambila Macias, Jose, 2008. "The Dynamics of Parallel Economies. Measuring the Informal Sector in México," MPRA Paper 8400, University Library of Munich, Germany.
  2. Sarbajit Chaudhuri & Ujjaini Mukhopadhyay, 2002. "Economic liberalization and welfare in a model with an informal sector," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 10(1), pages 143-172, March.
  3. Ann Harrison, 2006. "Globalization and Poverty," NBER Working Papers 12347, National Bureau of Economic Research, Inc.
  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. Kar, Saibal & Marjit, Sugata, 2009. "Urban informal sector and poverty," International Review of Economics & Finance, Elsevier, Elsevier, vol. 18(4), pages 631-642, October.
  6. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
  7. Sarbajit Chaudhuri, 2003. "How and how far to liberalize a developing economy with informal sector and factor market distortions," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 12(4), pages 403-428.
  8. Funkhouser, Edward, 1997. "Mobility and Labor Market Segmentation: The Urban Labor Market in El Salvador," Economic Development and Cultural Change, University of Chicago Press, vol. 46(1), pages 123-53, October.
  9. Marjit, Sugata & Kar, Saibal & Acharyya, Rajat, 2007. "Agricultural prospects and informal wage in general equilibrium," Economic Modelling, Elsevier, Elsevier, vol. 24(3), pages 380-385, May.
  10. 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.
  11. Hartmut Lehmann & Norberto Pignatti, 2008. "Informal Employment Relationships and Labor Market Segmentation in Transition Economies: Evidence from Ukraine," ESCIRRU Working Papers 3, DIW Berlin, German Institute for Economic Research.
  12. Carruth, Alan A. & Oswald, Andrew J., 1981. "The determination of union and non-union wage rates," European Economic Review, Elsevier, Elsevier, vol. 16(2), pages 285-302.
  13. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "The Effects of the Colombian Trade Liberalization on Urban Poverty," NBER Chapters, in: Globalization and Poverty, pages 241-290 National Bureau of Economic Research, Inc.
  14. Funkhouser, Edward, 1997. "Demand-Side and Supply-Side Explanations for Barriers to Labor Market Mobility in Developing Countries: The Case of Guatemala," Economic Development and Cultural Change, University of Chicago Press, vol. 45(2), pages 341-66, January.
  15. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 20(4), pages 733-783, October.
  16. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2007. "Economic liberalization, capital mobility and informal wage in a small open economy: A theoretical analysis," Economic Modelling, Elsevier, Elsevier, vol. 24(6), pages 924-940, November.
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Citations

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Cited by:
  1. Beladi, Hamid & Mandal, Biswajit, 2011. "Recessionary shock and factor return in an underemployed economy," MPRA Paper 33733, University Library of Munich, Germany.
  2. Mandal, Biswajit, 2009. "Would Recession Induce More Intermediation in the Corrupt Informal Sector?," MPRA Paper 19930, University Library of Munich, Germany, revised 10 Jan 2010.
  3. Chaudhuri, Sarbajit, 2010. "Economic recession, demand constraint and labour markets in a developing economy," MPRA Paper 27433, University Library of Munich, Germany.
  4. Mandal, Biswajit & Marjit, Sugata & Beladi, Hamid, 2010. "Recessionary shock, capital mobility and the informal sector," MPRA Paper 33736, University Library of Munich, Germany, revised Jan 2011.
  5. Mandal, Biswajit & Chaudhuri, Saswati, 2010. "Informal Wage, Informal Price and Extortion under Migration and Tariff Reform," MPRA Paper 28704, University Library of Munich, Germany.

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