FORMAL-INFORMAL SECTORS¡¯ CONFLICT: A STRUCTURALIST FRAMEWORK FOR INDIA

Saumya Chakrabarti () and Anirban Kundu ()
Additional contact information
Saumya Chakrabarti: Department of Economics and Politics, Visva-Bharati University
Anirban Kundu: Centre for Development Studies, Trivandrum

Journal of Economic Development, 2009, vol. 34, issue 2, 27-67

Abstract: The vast informal sector of the developing world in general and of India in particular is increasingly considered as a ¡®dispersed development engine¡¯ by the orthodox schools. It is also argued, though sizeable portion of informal sector exists independent of formal sector, a large segment bears a complementary relationship with these formal productions. However, on the contrary we propose a fundamental conflict between the two sectors given the generic food-supply-constraint. To analyse such a proposition we construct a multi-sector macroeconomic framework and also show that agriculture-formal sector interaction is distinctly different from agriculture-informal sector linkage. Next, we examine the impacts of variations in agricultural productivity and that of fiscal policy changes on this formal-informal conflict. In the first case of increasing agricultural productivity while both formal and informal sectors expand, the former benefits proportionately more than the latter. In the second case of expansionary fiscal policy the informal sector expands even at the cost of contraction of the formal one.

Keywords: Agriculture-Formal Sector Linkage; Domestic Exports; Agriculture-Informal; Sector Symbiosis; Agricultural Supply-Constraint; Formal-Informal Conflict (search for similar items in EconPapers)
JEL-codes: E12 O11 O17 Q18 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.jed.or.kr/full-text/34-2/2.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:jed:journl:v:34:y:2009:i:2:p:27-67

Access Statistics for this article

Journal of Economic Development is currently edited by Sung Y. Park

More articles in Journal of Economic Development from Chung-Ang Unviersity, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sung Y. Park ().