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Labor market reform and poverty – the role of informal sector

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  • Marjit, Sugata
  • Kar, Saibal
  • Maiti, Dibyendu

Abstract

Recent papers, discussing the impact of economic reform in India, argue that the positive effect of reform is more significant in states, which are not ‘labor friendly’. Also labor market reforms seem to be a pre-condition for success of liberal policies as far as their impact on poverty is concerned. We argue that the exact mechanism behind such a link is yet to be clarified. We try to provide such a mechanism in terms of a general equilibrium model involving formal and informal workers. Our framework is capable of providing such a link and shows that there are occasions when such link is violated.

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File URL: http://mpra.ub.uni-muenchen.de/23999/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23999.

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Date of creation: Apr 2008
Date of revision: 2009
Handle: RePEc:pra:mprapa:23999

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Related research

Keywords: Informal labor; capital mobility; labor market reform;

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References

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  1. Petia Topalova, 2007. "Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts," NBER Chapters, in: Globalization and Poverty, pages 291-336 National Bureau of Economic Research, Inc.
  2. Kar, Saibal & Marjit, Sugata, 2009. "Urban informal sector and poverty," International Review of Economics & Finance, Elsevier, vol. 18(4), pages 631-642, October.
  3. Timothy Besley & Robin Burgess, 2002. "Can labour regulation hinder economic performance? Evidence from India," LSE Research Online Documents on Economics 3779, London School of Economics and Political Science, LSE Library.
  4. Rana Hasan & Devashish Mitra & Beyza P. Ural, 2006. "Trade Liberalization, Labor-Market Institutions, and Poverty Reduction: Evidence from Indian States," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 3(1), pages 71-122.
  5. Sugata Marjit & Saibal Kar & Hamid Beladi, 2007. "Trade Reform and Informal Wages," Review of Development Economics, Wiley Blackwell, vol. 11(2), pages 313-320, 05.
  6. Carruth, Alan A. & Oswald, Andrew J., 1981. "The determination of union and non-union wage rates," European Economic Review, Elsevier, vol. 16(2), pages 285-302.
  7. Marjit, Sugata, 2003. "Economic reform and informal wage--a general equilibrium analysis," Journal of Development Economics, Elsevier, vol. 72(1), pages 371-378, October.
  8. Esfahani, Hadi S & Salehi-Isfahani, Djavad, 1989. "Effort Observability and Worker Productivity: Towards an Explanation of Economic Dualism," Economic Journal, Royal Economic Society, vol. 99(397), pages 818-36, September.
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