Economic Liberalization and Informal Wage in a Small Open Economy: Does Capital Mobility count?
Empirical evidence suggests that the size of the informal sector in the developing countries has increased considerably during the liberalized economic regime. The present paper purports to analyze the consequences of economic reforms on the wellbeing of the informal sector workforce using a three-sector general equilibrium model with two informal sectors. The theoretical analysis finds that different liberalized policies produce diverse effects on the informal wage and that these results are independent of the nature of capital mobility between the informal and the formal sectors. It also shows that labour market reforms, contrary to the common wisdom, are likely to produce favourable effects on the informal wage.
|Date of creation:||01 Oct 2006|
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- Chaudhuri, Sarbajit, 2000.
"Rural-Urban Migration, the Informal Sector, Urban Unemployment, and Development Policies: A Theoretical Analysis,"
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- Sarbajit Chaudhuri & Ujjaini Mukherjee, 2005.
"Removal Of Protectionism, Foreign Investment And Welfare In A Model Of Informal Sector,"
- Chaudhuri, Sarbajit & Mukherjee, Ujjaini, 2002. "Removal of protectionism, foreign investment and welfare in a model of informal sector," Japan and the World Economy, Elsevier, vol. 14(1), pages 101-116, January.
- Chandra, Vandana & Khan, M Ali, 1993. "Foreign Investment in the Presence of an Informal Sector," Economica, London School of Economics and Political Science, vol. 60(237), pages 79-103, February.
- Marjit, Sugata, 1991. "Agro-based industry and rural-urban migration : A case for an urban employment subsidy," Journal of Development Economics, Elsevier, vol. 35(2), pages 393-398, April.
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