Revisiting the Informal Sector

Chaudhuri, Sarbajit; Mukhopadhyay, Ujjaini

doi:10.1007/978-1-4419-1194-0

Cited by 21 publications

(4 citation statements)

References 114 publications

(203 reference statements)

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“…brick kilns). 13 The energy tax we consider could cause substitution toward informal energy, creating leakage in emissions and therefore requiring a larger tax rate to achieve the same net reduction in emissions (Chaudhuri and Mukhopadhyay [2010] provide a review of this effect).…”

Section: Developing Economies and Informal Fuelsmentioning

confidence: 99%

Environmental policy in the presence of an informal sector

Bento

Jacobsen

Liu

2018

Journal of Environmental Economics and Management

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We demonstrate how the presence of an untaxed informal sector can sharply lower the cost of environmental and energy tax policy. The mechanism involves substitution between formal and informal labor supply: energy or environmental taxes can improve the efficiency of the tax system by drawing activity into the formal sector. Our result applies to broad classes of corrective taxes and we first present it in a simple analytical framework. We then investigate its magnitude in a simulation model using the case of an energy tax in the U.S., where the informal sector is relatively small. Even so, we find the cost of energy taxes is negative for abatement up to 6% and substantially reduced for large policies. Developing countries provide an important extension: they have much larger informal sectors but at the same time include the potential for substitution into informal fuels. We model these countervailing features and show that the welfare enhancing effect typically dominates, making the efficiency improvements even greater than in the U.S. case.

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Section: Developing Economies and Informal Fuelsmentioning

confidence: 99%

Environmental policy in the presence of an informal sector

Bento

Jacobsen

Liu

2018

Journal of Environmental Economics and Management

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“…1 The earlier literature on the subject viewed the informal economy as a 'monolithic' bloc where all those without access to the formal sector find themselves in (Ranis and Stewart 1999;La Porta and Shleifer 2014). More recent studies have highlighted the heterogeneous nature of the informal economy, recognizing the inherent duality in both self-employment and wage employment (Chaudhuri and Mukhopadhyay 2010;Günther and Launov 2012;Harati 2013;Kanbur 2017;Canelas 2019). In informal self-employment, a distinction can be made between employers: that is, enterprises that employ hired workers and are relatively productive and own-account enterprises that use family labour and are involved in subsistence activities (Chen 2006).…”

Section: Introductionmentioning

confidence: 99%

Transitions between informal and formal jobs in India: Patterns, correlates, and consequences

Raj¹,

Schotte²,

Sen³

2020

WIDER Working Paper

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“…Marjit and Kar (2011) compiled a number of papers in this context. Chaudhuri and Mukhopadhyay (2009) explored the workings of the informal sector in a general equilibrium framework. In a similar vein, our study takes into account the issues related to trade liberalization in the form of tariff reduction and foreign capital inflow in the context of the informal sector and unemployment.…”

Section: Introductionmentioning

confidence: 99%

“…Expansion of industries and the resulting economic opportunities in urban areas triggered rural-urban migration and massive urbanization. However, industrial development failed to generate adequate employment and income opportunities in the urban sector, therefore the surplus labor force was forced to generate its own means of employment and survival in the informal sector(Chaudhuri & Mukhopadhyay 2009). 2 This assumption seems reasonable for a developing economy in which the non-farm rural informal sector plays an important role.…”

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confidence: 99%

Economic Liberalization, the Informal Sector, and Urban Unemployment: A Theoretical Analysis

Ghosh

Mandal

Gupta

2018

Rev Urban & Reg Develop

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In this paper, we construct a three‐sector general equilibrium model of a small open economy with an informal sector and examine the impact of a less protectionist policy on output levels, factor prices, and the level of urban employment. We show that the urban unemployment rate has reduced with the contraction of an import‐competing manufacturing sector consequent upon tariff reductions. The informal intermediate sector has contracted as well. A possibility to expand the exportable agricultural sector exists, with an increased wage rate. Our analysis is then extended to introduce foreign capital inflow and examine the output effects and the level of unemployment. Interestingly, in the extended model, urban unemployment is aggravated as a result of an inflow of foreign capital.

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Revisiting the Informal Sector

Cited by 21 publications

References 114 publications

Environmental policy in the presence of an informal sector

Environmental policy in the presence of an informal sector

Transitions between informal and formal jobs in India: Patterns, correlates, and consequences

Economic Liberalization, the Informal Sector, and Urban Unemployment: A Theoretical Analysis

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