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Informality, Corruption, and Inequality

Author

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  • Mishra, Ajit
  • Ray, Ranjan

Abstract

The paper looks at the determinants of the size of the informal sector. We argue that corruption and informality complement each other and are jointly determined by various market and non-market variables. Our theoretical model as well empirical exercises focus on wealth and income inequality as a key determinant. High degree of inequality leads to bigger informal sector. We offer several plausible channels through inequality can impact the size of the informal sector.

Suggested Citation

  • Mishra, Ajit & Ray, Ranjan, 2010. "Informality, Corruption, and Inequality," Department of Economics Working Papers 22127, University of Bath, Department of Economics.
  • Handle: RePEc:eid:wpaper:22127
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    File URL: http://opus.bath.ac.uk/22127/1/1310.pdf
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    References listed on IDEAS

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    Cited by:

    1. Vikram Nehru, 2013. "Manufacturing in India and Indonesia: performance and policies," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 49(1), pages 35-60, April.

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