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Informal Labour Markets in Pakistan

Author

Listed:
  • Muhammad Ali Choudhary

    (State Bank of Pakistan)

  • Saima Naeem

    (State Bank of Pakistan)

  • Gylfi Zoega

    (University of London,)

Abstract

This paper describes the results of a survey of informal-sector firms in Pakistan. Firms belong to the informal sector mainly because of scarce financial resources. There are significant differences in the level of wages and the flexibility of wages with the informal sector having both lower wages and greater flexibility than the formal sector. While minimum wages are less binding in the informal sector, a sort of indexation of wages to inflation is more common. In spite of these differences the reasons for not cutting wages in a recession are similar between the two sectors.

Suggested Citation

  • Muhammad Ali Choudhary & Saima Naeem & Gylfi Zoega, 2016. "Informal Labour Markets in Pakistan," SBP Working Paper Series 75, State Bank of Pakistan, Research Department.
    • Handle: RePEc:sbp:wpaper:75
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    References listed on IDEAS

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    More about this item

    Keywords

    Informal sector; wage setting; wage rigidity.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market

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