Globalization, Reform and the Informal Sector

informal sector, reformatory policies, production organization

Globalization, reform and the informal sector

The objective of the paper is to understand the transforming relationship between the formal and informal sector in a liberalizing open developing economy. There are various facets in this relationship, and we focus on three essential aspects. First, we look at the impact of deregulatory policies in the informal sector on informal wages, the earning index of the substantial majority of the workforce in a developing economy. Theoretical discussions are followed by empirical evidence on informal manufacturing in India. Implications of introducing labour laws are also discussed. Then, we highlight the vertical relationship between the formal and the informal sectors and the consequence of reformatory policies, in particular, the impact on the relative size of these segments within an erstwhile protected sector. Empirical evidence from Brazil and Colombia seems to match our theoretical conjectures. We conclude with a discussion of a fieldbased survey on the changing relationship between formal and informal entrepreneurs in a range of rural industries in India, as these industries gear up for expanded markets and export. This is done to provide further insight into the transformation process

Religious fragmentation, social identity and cooperation: Evidence from an artefactual field experiment in India

We study the role of village-level religious fragmentation on intra- and inter-group cooperation in India. We report on data on two-player prisoners׳ dilemma and stag hunt experiments played by 516 Hindu and Muslim participants in rural India. Our treatments are the identity of the two players and the degree of village-level religious heterogeneity. In religiously heterogeneous villages, cooperation rates in the prisoners׳ dilemma, and to a lesser extent the stag hunt game, are higher when subjects of either religion play with a fellow in-group member than when they play with an out-group member or with someone whose identity is unknown. Interestingly, cooperation rates among people of the same religion are significantly lower in homogeneous villages than in fragmented villages in both games.We gratefully acknowledge financial support from the ESRC Grant ES/J018643/1

Religious fragmentation, social identity and other-regarding preferences: Evidence from an artefactual field experiment in India

This is the final version. Available on open access from Elsevier via the DOI in this recordWe examine the impact of religious identity and village-level religious fragmentation on other-regarding preferences. We report on a series of two-player binary Dictator experiments conducted on a sample of 516 Hindu and Muslim participants in rural West Bengal, India. Our treatments are the identity of the two players and the degree of religious fragmentation in the village where subjects reside. Both Muslims’ and Hindus’ aversion to advantageous inequality declines as the probability of facing an out-group member increases. We find no evidence of aversion to disadvantageous inequality on either religious sample. Both Muslim and Hindu participants display aversion to advantageous inequality in both fragmented villages and homogeneous villages. The effect of village fragmentation on aversion to disadvantageous inequality differs across religious groups.Economic and Social Research Council (ESRC

Import Tariff Led Export Under-Invoicing: A Paradox

Prolonged worldwide economic depression forces some economists and policy makers to demand for a tougher regulation to protect their domestic economy. If implemented, this may lead to a high tariff and non-tariff regime that ruled the pre-globalised world economy. This paper examines the consequences of a tariff protected trade regime. It takes up the case of trade misreporting phenomena under the framework of protected regime. It builds up a basic trade mis-invoicing model and then develops a collusion between underreporting traders of partner countries. I show that high tariff barrier gives incentives not only to the importers but also to the exporters to gain by underreporting the trade statistics. Interestingly, this paper shows that even if foreign exchange is fully floated, underground foreign exchange market can be created and exporters may rationally underreport without any gain through black market premium a departure from conventional theory

Foreign Capital Inflow, Skilled-Unskilled Wage Inequality and Unemployment of Unskilled Labour in a Fair Wage Model

This paper has developed a three-sector general equilibrium framework that explains unemployment of both skilled and unskilled labour. Unemployment of unskilled labour is of the Harris-Todaro (1970) type while unemployment of skilled labour is caused due to the validity of the FWH in the high-skill sector. There are two types of capital one of which is specific to the primary export sector while the other moves freely among the different sectors. Inflows of foreign capital of either type unambiguously improve the economic conditions of the unskilled working class. However, the effects on the skilled-unskilled wage inequality and the extent of unemployment of both types of labour crucially hinge on the properties implied by the efficiency function of the skilled workers

Uncertain R&D Outcomes and Cooperation in R&D

The present paper provides a brief survey of some of the papers dealing with R&D uncertainty. This helps us identify which factors are more favorable for cooperative R&D and which factors are not. The paper provides the analysis under a unified framework. We take the classic paper by Marjit (1991) as the benchmark case, and then proceeds to examine whether, or to what extent, Marjit result will undergo a change with respect to different assumptions related to R&D investment