Journal ArticleDOI
Characterisation of Economic Growth in Developing Economies with Informal Sector
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In this paper, the authors present a general equilibrium model of a developing economy with a capital intensive formal sector and a large informal sector with sector-specific capital to analyse the effects of investments on the sectoral returns to capital, sectoral wage rates, and composition of output and employment.Abstract:
The paper presents a general equilibrium model of a developing economy with a capital intensive formal sector and a large informal sector with sector-specific capital to analyse the effects of investments on the sectoral returns to capital, sectoral wage rates, and composition of output and employment. Beginning with capital market disequilibrium (unequal sectoral rates of return) and labour market distortion (formal-informal wage gap), the model traces the evolution of the economy till capital market equilibrium is attained. The investments in the formal sector equalise the wages (a “turning point” in growth a la Lewis) and reduces the size of the informal sector. The sectoral rates of returns equalise only if there is no factor intensity reversal, otherwise the economy specialises in the production of formal goods. The investments in the informal sector equalise the rates of return, do not affect the size of the formal sector and finally, a formal-informal wage gap persists provided factor intensities are not reversed.read more
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References
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Journal ArticleDOI
The Return to Capital in Ghana
Christopher Udry,Santosh Anagol +1 more
TL;DR: This article showed that the real return to capital in Ghana's informal sector is high, with annual returns ranging from 205-350% in the new technology of pineapple cultivation, and 30-50% in well-established food crop cultivation.
BookDOI
International Trade, Wage Inequality and the Developing Economy
Sugata Marjit,Rajat Acharyya +1 more
Journal ArticleDOI
Barriers To Entry And Returns To Capital In Informal Activities: Evidence From Sub-Saharan Africa
TL;DR: In this article, the authors investigated the patterns of capital entry barriers and capital returns in informal Micro and Small Enterprises (MSE's) using a unique micro data set seven West-African countries.
Journal ArticleDOI
Economic liberalization and wage inequality in the presence of labour market imperfection
TL;DR: In this paper, the authors analyzed the consequences of liberalized economic policies on the skilled-unskilled wage inequality in the developing countries using a three sector general equilibrium model reasonable for at least a few developing economies.
Book
International Trade, Wage Inequality and the Developing Economy: A General Equilibrium Approach
Sugata Marjit,Rajat Acharyya +1 more
TL;DR: In this paper, a specific-factor model of trade and income distribution in the HOS model is proposed to explain the asymmetric wage gap in the United Kingdom and the United States.