 THE RELATIVE PERFORMANCE OF FORMAL AND INFORMAL SECTORS IN INDIAAmarendra Sahoo and Thijs ten Raa Economic Systems Research, 2009, vol. 21, issue 2, 151-162 Abstract: We evaluate the relative performance of formal and informal sectors in India by looking into their productivity difference. Recognizing the intersectoral linkages in the economy, the competitive general equilibrium prices are computed; these signal the productivities. Our model synthesizes frontier analysis with the general equilibrium approach to generate shadow prices. The formal activities are found to be more productive than the informal. However, the informal services sector is as efficient as the formal one. There would be an overall productivity gain of 22% to the economy if factors were allocated to productive activities. The shadow prices from the model indicate that the formal capital and informal capital are scarce factors, while it has been the opposite for formal (regular) and informal (casual) labour. Formal labour is more productive than its informal counterpart; formal capital and informal capital are equally productive. Keywords: Productivity; Formal and informal sectors; Competitive prices; General equilibrium (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:ecsysr:v:21:y:2009:i:2:p:151-162 Ordering information: This journal article can be ordered from DOI: 10.1080/09535310902995719 Access Statistics for this article Economic Systems Research is currently edited by Bart Los and Manfred Lenzen More articles in Economic Systems Research from Taylor & Francis Journals |
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