Productivity of Indian Informal Workers

Anushree Sinha

Journal of South Asian Development, 2010, vol. 5, issue 1, 15-52

Abstract: In a globalised world, recessions strike formal sectors more swiftly, which when adopting cost-cutting measures retrench regular workers with higher non-negotiable wages. An economywide computable general equilibrium (CGE) model with different labour market closures has been used to study the impact of such a recession on labour productivity. Results show that labour productivity is more adversely affected when regular wages are increasingly rigid. Because of such wage rigidity, many formal workers lose jobs and tend to join the informal labour force. As a result, formal workers are transformed into informal workers, thereby transforming to low-productivity wage earners. They earn less and create lower demand compared with the earlier situation and affect overall growth. A rise in the number of informal workers exerts downward pressure on casual wages, which fall on the average. The stylised model findings show that global slowdown causes casual wages to decline, increasing wage and productivity inequalities between the formal and informal labour markets.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/097317411000500102 (text/html)

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:sae:soudev:v:5:y:2010:i:1:p:15-52

DOI: 10.1177/097317411000500102

Access Statistics for this article

More articles in Journal of South Asian Development
Bibliographic data for series maintained by SAGE Publications ().