A theoretical model of wage effect of informal sector has been developed with special reference of informal sector. The implication of the theory in the context of a model of a competitive labour market where the wage impact of informal employment is influenced by such factors as the elasticity of product demand, the rate at which the consumer base as workers enter informal sector, the elasticity of supply of capital, and the elasticity of substitution across inputs of production. The analysis reveals that the short-run wage effect of informalisation is negative in a wide array of possible scenarios, and that even the long-run effect of informalisation is positive, but may be negative if the impact of informalisation on the potential size of the consumer base is smaller than its impact on the size of the workforce. These predictions are then empirically validated using two different measures of the size of the informal sector. The results are shown to be robust with respect to a variety of econometric regressions
| Published in |
Journal of World Economic Research (Volume 4, Issue 5-1)
This article belongs to the Special Issue The Globalization and Economic Structure Changes |
| DOI | 10.11648/j.jwer.s.2015040501.17 |
| Page(s) | 53-62 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2015. Published by Science Publishing Group |
Informal Sector, Real Wage, Labour Market, Competitive Market
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APA Style
Tchakounté Njoda Mathurin, Abdoul Karim. (2015). The Wage Effect of Informal Sector in Developing Countries. Journal of World Economic Research, 4(5-1), 53-62. https://doi.org/10.11648/j.jwer.s.2015040501.17
ACS Style
Tchakounté Njoda Mathurin; Abdoul Karim. The Wage Effect of Informal Sector in Developing Countries. J. World Econ. Res. 2015, 4(5-1), 53-62. doi: 10.11648/j.jwer.s.2015040501.17
AMA Style
Tchakounté Njoda Mathurin, Abdoul Karim. The Wage Effect of Informal Sector in Developing Countries. J World Econ Res. 2015;4(5-1):53-62. doi: 10.11648/j.jwer.s.2015040501.17
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Download@article{10.11648/j.jwer.s.2015040501.17,
author = {Tchakounté Njoda Mathurin and Abdoul Karim},
title = {The Wage Effect of Informal Sector in Developing Countries},
journal = {Journal of World Economic Research},
volume = {4},
number = {5-1},
pages = {53-62},
doi = {10.11648/j.jwer.s.2015040501.17},
url = {https://doi.org/10.11648/j.jwer.s.2015040501.17},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.s.2015040501.17},
abstract = {A theoretical model of wage effect of informal sector has been developed with special reference of informal sector. The implication of the theory in the context of a model of a competitive labour market where the wage impact of informal employment is influenced by such factors as the elasticity of product demand, the rate at which the consumer base as workers enter informal sector, the elasticity of supply of capital, and the elasticity of substitution across inputs of production. The analysis reveals that the short-run wage effect of informalisation is negative in a wide array of possible scenarios, and that even the long-run effect of informalisation is positive, but may be negative if the impact of informalisation on the potential size of the consumer base is smaller than its impact on the size of the workforce. These predictions are then empirically validated using two different measures of the size of the informal sector. The results are shown to be robust with respect to a variety of econometric regressions},
year = {2015}
}
TY - JOUR T1 - The Wage Effect of Informal Sector in Developing Countries AU - Tchakounté Njoda Mathurin AU - Abdoul Karim Y1 - 2015/08/13 PY - 2015 N1 - https://doi.org/10.11648/j.jwer.s.2015040501.17 DO - 10.11648/j.jwer.s.2015040501.17 T2 - Journal of World Economic Research JF - Journal of World Economic Research JO - Journal of World Economic Research SP - 53 EP - 62 PB - Science Publishing Group SN - 2328-7748 UR - https://doi.org/10.11648/j.jwer.s.2015040501.17 AB - A theoretical model of wage effect of informal sector has been developed with special reference of informal sector. The implication of the theory in the context of a model of a competitive labour market where the wage impact of informal employment is influenced by such factors as the elasticity of product demand, the rate at which the consumer base as workers enter informal sector, the elasticity of supply of capital, and the elasticity of substitution across inputs of production. The analysis reveals that the short-run wage effect of informalisation is negative in a wide array of possible scenarios, and that even the long-run effect of informalisation is positive, but may be negative if the impact of informalisation on the potential size of the consumer base is smaller than its impact on the size of the workforce. These predictions are then empirically validated using two different measures of the size of the informal sector. The results are shown to be robust with respect to a variety of econometric regressions VL - 4 IS - 5-1 ER -
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