Informality, Corruption, and Inequality

Ajit Mishra and Ranjan Ray

No 13/10, Department of Economics Working Papers from University of Bath, Department of Economics

Abstract: The paper looks at the determinants of the size of the informal sector. We argue that corruption and informality complement each other and are jointly determined by various market and non-market variables. Our theoretical model as well empirical exercises focus on wealth and income inequality as a key determinant. High degree of inequality leads to bigger informal sector. We offer several plausible channels through inequality can impact the size of the informal sector.

Keywords: product; informal sector; corruption; differentiation; credit market; inequality (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (10)

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