IDEAS home Printed from https://ideas.repec.org/a/taf/ucsbxx/v5y2024i3p282-303.html
   My bibliography  Save this article

Productivity and wage gaps between informal and formal firms in India: Trends and determinants

Author

Listed:
  • Golam Rabbani
  • Rajesh Raj S N

Abstract

This study examines the productivity and wage gaps between informal and formal sector firms in India. Using a comprehensive dataset covering a 15-year period, we explore the influence of access to finance, infrastructure, and labor regulations on these gaps. Employing standard Oaxaca decomposition method, we analyze the role of these factors in explaining the informal–formal gaps in wages and productivity. Our results reveal significant and expanding gaps in both productivity and wages between informal and formal firms. Decomposition analysis suggests firm characteristics and infrastructure as primary factors widening the gaps, while access to finance and flexible labor regulations help narrow them. The findings point to the importance of targeted interventions needed to augment the growth and development of the informal manufacturing sector. Policies that enhance access to finance, improve infrastructure, and promote favorable labor markets can contribute to narrowing the gaps.

Suggested Citation

  • Golam Rabbani & Rajesh Raj S N, 2024. "Productivity and wage gaps between informal and formal firms in India: Trends and determinants," Journal of the International Council for Small Business, Taylor & Francis Journals, vol. 5(3), pages 282-303, July.
    • Handle: RePEc:taf:ucsbxx:v:5:y:2024:i:3:p:282-303
    DOI: 10.1080/26437015.2024.2336458
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/26437015.2024.2336458
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/26437015.2024.2336458?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ucsbxx:v:5:y:2024:i:3:p:282-303. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/ucsb .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.