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Labor Market Reform And Poverty – The Role Of Informal Sector

In: New And Enduring Themes In Development Economics

Author

Listed:
  • SUGATA MARJIT

    (Centre for Studies in Social Sciences, Kolkata, India)

  • SAIBAL KAR

    (Centre for Studies in Social Sciences, Kolkata, India and HWWI, Hamburg, Germany)

  • DIBYENDU SUNDAR MAITI

    (Centre for Studies in Social Sciences, Kolkata, India)

Abstract

Recent papers, discussing the impact of economic reform in India, argue that the positive effect of reform is more significant in states, which are not 'labour friendly'. Also labour market reforms seem to be a pre-condition for success of liberal policies as far as their impact on poverty is concerned. We argue that the exact mechanism behind such a link is yet to be clarified. We try to provide such a mechanism in terms of a general equilibrium model involving formal and informal workers. Our framework is capable of providing such a link and shows that there are occasions when such link is violated.

Suggested Citation

  • Sugata Marjit & Saibal Kar & Dibyendu Sundar Maiti, 2009. "Labor Market Reform And Poverty – The Role Of Informal Sector," World Scientific Book Chapters, in: Bhaskar Dutta & Tridip Ray & E Somanathan (ed.), New And Enduring Themes In Development Economics, chapter 11, pages 229-240, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789812839428_0011
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    References listed on IDEAS

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    1. Esfahani, Hadi S & Salehi-Isfahani, Djavad, 1989. "Effort Observability and Worker Productivity: Towards an Explanation of Economic Dualism," Economic Journal, Royal Economic Society, vol. 99(397), pages 818-836, September.
    2. Petia Topalova, 2007. "Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts," NBER Chapters, in: Globalization and Poverty, pages 291-336, National Bureau of Economic Research, Inc.
    3. Hasan, Rana & Mitra, Devashish & Ural, Beyza P., 2007. "Trade Liberalization, Labor-Market Institutions, and Poverty Reduction: Evidence from Indian States," India Policy Forum, National Council of Applied Economic Research, vol. 3(1), pages 71-122.
    4. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 91-134.
    5. Kar, Saibal & Marjit, Sugata, 2009. "Urban informal sector and poverty," International Review of Economics & Finance, Elsevier, vol. 18(4), pages 631-642, October.
    6. Sugata Marjit & Saibal Kar & Hamid Beladi, 2007. "Trade Reform and Informal Wages," Review of Development Economics, Wiley Blackwell, vol. 11(2), pages 313-320, May.
    7. Marjit, Sugata, 2003. "Economic reform and informal wage--a general equilibrium analysis," Journal of Development Economics, Elsevier, vol. 72(1), pages 371-378, October.
    8. Carruth, Alan A. & Oswald, Andrew J., 1981. "The determination of union and non-union wage rates," European Economic Review, Elsevier, vol. 16(2), pages 285-302.
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    Cited by:

    1. Saibal Kar & Mausumi Kar, 2015. "Liberalized trade policy and inequality: Evidence from Post-Multi-Fibre Arrangement India and some theoretical issues," WIDER Working Paper Series 007, World Institute for Development Economic Research (UNU-WIDER).
    2. 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).
    3. Dibyendu Maiti & Kunal Sen, 2010. "The Informal Sector in India," Journal of South Asian Development, , vol. 5(1), pages 1-13, April.
    4. Mausumi Kar & Saibal Kar, 2015. "Liberalized trade policy and inequality: Evidence from Post-Multi-Fibre Arrangement India and some theoretical issues," WIDER Working Paper Series wp-2015-007, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Development Economics; Happiness; Well-Being; Political Economy; Economic of Labour; Agricultural Economics;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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