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Regulation, enforcement and informality: an analysis based on selected countries

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  • Roychowdhury, Punarjit

Abstract

It is claimed that introducing flexibility in regulation is a sufficient condition for curbing the level of informality in the developing world. This dissertation tries to test the validity of this claim using data for 46 countries over the time period 1980-2008 to explore the dynamics between regulation and informal employment. The empirical findings obtained using Panel Data regression point out that regulation does not significantly affect informality. What matters is the interaction between governance and regulation. Thus, it is established that the quality of governance and the institutions enforcing the regulation are more important in context of curbing the level of informality. In addition, the dissertation also tries to find out the most important instruments of regulation that a state can put to use in context of informality.

Suggested Citation

  • Roychowdhury, Punarjit, 2011. "Regulation, enforcement and informality: an analysis based on selected countries," MPRA Paper 32150, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:32150
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    File URL: https://mpra.ub.uni-muenchen.de/32150/1/MPRA_paper_32150.pdf
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    References listed on IDEAS

    as
    1. Blunch, Niels-Hugo & Canagarajah, Sudharshan & Raju, Dhushyanth, 2001. "The informal sector revisited : a synthesis across space and time," Social Protection and Labor Policy and Technical Notes 23308, The World Bank.
    2. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    3. Marjit, Sugata & Kar, Saibal, 2011. "The Outsiders: Economic Reform and Informal Labour in a Developing Economy," OUP Catalogue, Oxford University Press, number 9780198071495.
    4. R. Hirschowitz, 1989. "The Other Path: The Invisible Revolution in the Third World," South African Journal of Economics, Economic Society of South Africa, vol. 57(4), pages 266-272, December.
    5. Chen, Martha Alter, 2005. "Rethinking the Informal Economy: Linkages with the Formal Economy and the Formal Regulatory Environment," WIDER Working Paper Series 010, World Institute for Development Economic Research (UNU-WIDER).
    6. Dibyendu Maiti & Kunal Sen, 2010. "The Informal Sector in India," Journal of South Asian Development, , vol. 5(1), pages 1-13, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Informality; Regulation; Enforcement; Governance; Panel Data;

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • L00 - Industrial Organization - - General - - - General

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