Subcontracting and the Size and Composition of the Informal Sector: Evidence from Indian Manufacturing

Ana Moreno-Monroy, Janneke Pieters and Abdul Azeez Erumban

No 6785, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes the relationship between formal sector subcontracting and the evolution of the informal sector using nationally representative survey data of Indian manufacturing enterprises for the period 1995-2006. In these years of fast economic growth, subcontracting by formal enterprises gained importance, while the informal sector continued to account for 90 per cent of total manufacturing employment. In order to contrast between a 'modernization' and a 'stagnation' view on formal-informal production linkages, we test whether subcontracting is related to the size of more modern versus more traditional segments of the informal sector. The results show that formal sector subcontracting is positively related to the size of the informal sector only for the most modern informal activities, supporting the view that subcontracting is related to informal sector modernization. We find no support for the claim that the continued expansion of very traditional informal activities is related to increased outsourcing by formal manufacturing enterprises.

Keywords: informal sector; formal sector; subcontracting; India; manufacturing (search for similar items in EconPapers)
JEL-codes: L60 O14 O17 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-08
New Economics Papers: this item is included in nep-iue
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published - published as 'Formal Sector Subcontracting and Informal Sector Employment in Indian Manufacturing' in: IZA Journal of Labor & Development, 2014, 3(22)

Downloads: (external link)
https://docs.iza.org/dp6785.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp6785

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
library@iza.org

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte (hinte@iza.org).