Whitman School of Management at Syracuse University
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Abstract Details

Informality, Vulnerability and Development
Vol. Volume 16 Number 2 June/2011

Dibyendu Maiti

Arup Mitra

This paper makes an attempt to estimate the index of informal sector employment that can be attributed to the supply-push phenomenon.  Factors explaining the inter-state variations in this index include the industrial-informal sector wage gap, revenue expenditure and development expenditure incurred by the government.  Increased development expenditure brings a decline in distress-led informalization because education, health and infrastructure facilities tend to enhanced the employability of an individual.  However, education as such does not reduce the reidual absorption in the informal sector unless there is improvement in quality.  The paper also notes an increase in inequality with an increase in distress-led informalization.  Adoption of labor intensive technology in the organized or formal industrial sector is indeed crucial for pro-poor growth.  The othe policy implication is in terms of enhanced investment inthe areasof human capital formation and overall development of the region    

Keywords: Informal sector, Supply-push, Development expenditure, Stochastic frontier