Economic Recession and Informal Sector Workers
AbstractThe paper develops a three-sector specific factor model with Harris-Todaro type unemployment to examine the consequences of economic recession in the skilled sector on the informal sector workforce. It finds that while a decrease in the price of high-skill commodity raises both the informal (rural) sector wage and unemployment of unskilled labour, a drop in emigration of skilled labour produces exactly the opposite effects. The effects of these policies on the welfare of unskilled workers in terms of the welfare measure of Sen (1974) have also been studied. The paper recommends a protectionist policy to the unskilled labour-intensive sector for protecting the interest of the vulnerable section of the working population.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 18033.
Date of creation: 24 Apr 2009
Date of revision:
Skilled labour; unskilled labour; economic recession; informal wage; urban unemployment;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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- 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.
- Beladi, Hamid & Mandal, Biswajit, 2011. "Recessionary shock and factor return in an underemployed economy," MPRA Paper 33733, University Library of Munich, Germany.
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