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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The Stolper-Samuelson Theorem in a Wage Differential Framework
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Barriers to Entry and Returns to Capital in Informal Activities
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Investment and wage gap in India: a general equilibrium analysis
TL;DR: In this paper, the authors build a general equilibrium model of a developing economy with a large informal sector and a capital-intensive formal sector with sector-specific capital and incorporate endogenous demand, with homothetic preferences, a small initial wage premium and elastic relative demand.
References
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Journal ArticleDOI
The Labor Market and Economic Adjustment
TL;DR: In this article, the authors examine the role of the labor market in the transmission process of adjustment policies in developing countries and examine the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies.
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Informal sector in general equilibrium: welfare effects of trade policy reforms
TL;DR: In this paper, the welfare effects of trade policy reforms in a general equilibrium framework, in the presence of an informal sector in the economy, were analyzed and the authors developed a methodology to use a full-employment model with wage differential.
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Foreign Capital Inflow, Skilled-Unskilled Wage Inequality and Unemployment of Unskilled Labour in a Fair Wage Model
TL;DR: In this article, a three-sector general equilibrium framework was developed to explain the unemployment of both skilled and unskilled workers in the USA, where two types of capital are specific to the primary export sector and the other moves freely among the different sectors.
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The Formal/Informal Employment Earnings Gap: Evidence from Turkey
Aysit Tansel,Elif Oznur Kan +1 more
TL;DR: In this paper, the authors examined the formal/informal sector earnings differentials in the Turkish labor market using detailed econometric methodologies and a novel panel data set drawn from the 2006-2009 Income and Living Conditions Survey (SILC).
Journal ArticleDOI
Foreign capital inflow, skilled–unskilled wage inequality and unemployment of unskilled labour in a fair wage model
TL;DR: In this article, a three-sector general equilibrium framework was developed to explain the unemployment of both skilled and unskilled workers in the USA, where two types of capital are specific to the primary export sector and the other moves freely among the different sectors.