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Formal and Informal Sectors in China and India: An Accounting-Based Approach

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  • Codrina Rada

Abstract

This paper discusses the estimation of a social accounting matrix that distinguishes between formal and informal activities for China and India for 2000 and 1998-99 respectively. Wage shares for the formal/informal employment for China and net domestic product shares for the formal/informal sectors for India are being applied as weights to the input-output tables and flow of funds tables provided by official statistics. While some estimation techniques used in this paper remain vulnerable to criticism, the proposed methodology is a first step towards an integrated approach to account for the dualism of many economies in the developing world. The results are important data input for any policy-driven CGE model for developing countries.

Suggested Citation

  • Codrina Rada, 2009. "Formal and Informal Sectors in China and India: An Accounting-Based Approach," Working Paper Series, Department of Economics, University of Utah 2009_02, University of Utah, Department of Economics.
    • Handle: RePEc:uta:papers:2009_02
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    References listed on IDEAS

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    1. repec:pri:rpdevs:deaton_adjusted_poverty_india is not listed on IDEAS
    2. Fields,Gary S., 2005. "A guide to multisector labor market models," Policy Research Working Paper Series 32547, The World Bank.
    3. Ravallion, Martin & Chen, Shaohua, 2007. "China's (uneven) progress against poverty," Journal of Development Economics, Elsevier, vol. 82(1), pages 1-42, January.
    4. Fields,Gary S., 2005. "A guide to multisector labor market models," Social Protection and Labor Policy and Technical Notes 32547, The World Bank.
    5. Angus Deaton, 2003. "Adjusted Indian Poverty Estimates for 1999-2000," Working Papers 200, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
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    Cited by:

    1. Timilsina,Govinda R. & Dissou,Yazid & Toman, Mike & Heine,Dirk, 2021. "Carbon Tax in an Economy with Informality : A Computable General Equilibrium Analysis for Cote d’Ivoire," Policy Research Working Paper Series 9710, The World Bank.
    2. Vasco J. Gabriel & Paul Levine & Joseph Pearlman & Bo Yang, 2010. "An Estimated DSGE Model of the Indian Economy," NIPE Working Papers 29/2010, NIPE - Universidade do Minho.

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    More about this item

    Keywords

    informal sector; social accounting matrix; comparative economic systems; China; India;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • P44 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation

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