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Reform, Informal Sector and Extortion

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  • Mandal, Biswajit
  • Marjit, Sugata
  • Beladi, Hamid

Abstract

Informal economy involving unrecorded, unregistered, extra legal activities employs majority of the workforce in the developing world. Such extra legal existence of informal production is facilitated through extortion by agents of political forces in power. Also extortion activities themselves constitute an informal segment. Full scale general equilibrium consequences of such institutions are rarely discussed in the literature. We develop a well specified general equilibrium model to explore the possible consequences of reform. Economic reform may have an expansionary effect on the number of extortionists. Depending on capital mobility and factor intensity assumptions informal output and informal wage may increase.

Suggested Citation

  • Mandal, Biswajit & Marjit, Sugata & Beladi, Hamid, 2014. "Reform, Informal Sector and Extortion," MPRA Paper 58555, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:58555
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    Cited by:

    1. Sujata Ghosh & Biswajit Mandal, 2019. "Bureaucratic efficiency, economic reform and informal sector," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(2), pages 121-137, June.
    2. Saibal KAR & Biswajit MANDAL & Sugata MARJIT & Vivekananda MUKHERJEE, 2020. "Seeking Rent In The Informal Sector," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(1), pages 151-164, March.
    3. Mandal, Biswajit & Das, Maitrayee, 2023. "Effects of Time Zone Related Distance on Trade: Goods vs. Service," MPRA Paper 118256, University Library of Munich, Germany.
    4. Alaka Shree Prasad & Biswajit Mandal, 2019. "Time zone difference, skill formation and corrupt informal sector: the role of virtual trade," Indian Economic Review, Springer, vol. 54(2), pages 261-290, December.
    5. Prasad, Alaka Shree & Mandal, Biswajit, 2019. "Virtual trade between different time zones, educational capital and corrupt informal sector," MPRA Paper 96963, University Library of Munich, Germany.
    6. Mandal, Biswajit & Ghosh, Sujata, 2019. "Reformatory Policies and Factor Prices in a Developing Economy with Informal Sector," GLO Discussion Paper Series 367, Global Labor Organization (GLO).
    7. Biswajit Mandal & Alaka Shree Prasad, 2020. "A simple model of time zone differences, virtual trade and informality," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 14(1), pages 81-96, June.
    8. Mandal, Biswajit & Roy, Sangita, 2016. "Trade liberalization and wage distribution when skilled intermediate input is used in import competing sector that uses a commom type of capital," MPRA Paper 87460, University Library of Munich, Germany.

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    More about this item

    Keywords

    International Trade; Extortion; General Equilibrium.;
    All these keywords.

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F1 - International Economics - - Trade

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