Seeking Rent in the Informal Sector

Saibal Kar (), Biswajit Mandal, Sugata Marjit and Vivekananda Mukherjee

No 12068, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Rent seeking within the vast informal segment of the developing world is a relatively underdexplored topic in the interface of labor market policies and public economics. Moreover, how rent seeking and corruption within the informal segment is affected by economic reforms targeted for the formal sector is rarely discussed in the literature. This paper fills the gap. We identify conditions under which economic reform in the formal segment will increase the rate of corruption or rent seeking in the informal sector and raise the pay-off for those involved in rent seeking activities. When formal sector contracts due to reforms, offsetting forces determine the magnitude of rent seeking in the informal sector. Thus, economic reforms may increase corruption instead of reducing it, as claimed previously.

Keywords: informal sector; reforms; rent seeking; corruption; regulators (search for similar items in EconPapers)
JEL-codes: D73 E26 M48 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2019-01
New Economics Papers: this item is included in nep-iue and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Annals of Public and Cooperative Economics, 2020, 91 (1), 151-164

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Related works:
Journal Article: SEEKING RENT IN THE INFORMAL SECTOR (2020)
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