Recessionary shock, capital mobility and the informal sector

Biswajit Mandal, Sugata Marjit and Hamid Beladi

MPRA Paper from University Library of Munich, Germany

Abstract: Using the hybrid of Heckscher - Ohlin and Specific Factor models of trade we show that economic recession led shock results in a loss for both capitalists and skilled workers. Some of the unionized unskilled workers lose formal sector employment and move onto the informal sector. In case capital moves from formal to the informal, informal employment and wage both can go up in the informal segment. If capital does not move informal employment expands and wage drops. Thus recession may actually benefit a large number of informal workers.

Keywords: International Trade; Informal sector; General Equilibrium (search for similar items in EconPapers)
JEL-codes: D50 F11 O17 (search for similar items in EconPapers)
Date: 2010-08, Revised 2011-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Recessionary Shock, Capital Mobility and the Informal Sector (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:33736

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