70
Views
0
CrossRef citations to date
0
Altmetric
Articles

Productivity and wage gaps between informal and formal firms in India: Trends and determinants

ORCID Icon & ORCID Icon

References

  • Abegaz, M., & Nene, G. (2018). Gender wage and productivity gaps in the manufacturing industry. The case of Ghana. Economic Papers: A Journal of Applied Economics and Policy, 37(3), 313–326. https://doi.org/10.1111/1759-3441.12224
  • Abegaz, M., & Nene, G. (2023). Gender wage and productivity gaps in the Ethiopian manufacturing sector. Journal of Applied Economics, 26(1), 2160139. https://doi.org/10.1080/15140326.2022.2160139
  • Aghion, P., Bergeaud, A., Blundell, R., & Griffith, R. (2017). Innovation, firms and wage inequality. Working Paper Series. Department of Economics, Harvard University.
  • Allcott, H., Collard-Wexler, A., & O’Connell, S. D. (2016). How do electricity shortages affect industry? Evidence from India. American Economic Review, 106(3), 587–624. https://doi.org/10.1257/aer.20140389
  • Allen, J., Nataraj, S., & Schipper, T. C. (2018). Strict duality and overlapping productivity distributions between formal and informal firms. Journal of Development Economics, 135, 534–554. https://doi.org/10.1016/j.jdeveco.2018.08.011
  • Attanasio, O., Goldberg, P. K., & Pavcnik, N. (2004). Trade reforms and wage inequality in Colombia. Journal of Development Economics, 74(2), 331–366. https://doi.org/10.1016/j.jdeveco.2003.07.001
  • Banerjee, A., & Duflo, E. (2008). What is middle class about the middle classes around the world? Journal of Economic Perspectives, 22(2), 3–28. https://doi.org/10.1257/jep.22.2.3
  • Banerjee, A. V., & Duflo, E. (2005). Growth theory through the lens of development economics. Handbook of Economic Growth, 1, 473–552. https://doi.org/10.1016/S1574-0684(05)01007-5
  • Bartelsman, E., Haltiwanger, J., & Scarpetta, S. (2013). Cross-country differences in productivity: The role of allocation and selection. American Economic Review, 103(1), 305–334. https://doi.org/10.1257/aer.103.1.305
  • Basole, A., Chopde, D., & Nath, P. (2023). Estimating the productivity gap between organised and unorganised small-scale units in India’s manufacturing sector. Working Paper 51. Azim Premji University, Bengaluru, India.
  • Beck, T., & Demirguc-Kunt, A. (2006). Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & Finance, 30(11), 2931–2943. https://doi.org/10.1016/j.jbankfin.2006.05.009
  • Beck, T., Lu, L., & Yang, R. (2015). Finance and growth for microenterprises: Evidence from rural China. World Development, 67, 38–56. https://doi.org/10.1016/j.worlddev.2014.10.008
  • Besley, T., & Burgess, R. (2004). Can labor regulation hinder economic performance? Evidence from India. The Quarterly Journal of Economics, 119(1), 91–134. https://doi.org/10.1162/003355304772839533
  • Bils, M., Klenow, P. J., & Ruane, C. (2021). Misallocation or mismeasurement? Journal of Monetary Economics, 124, S39–S56. https://doi.org/10.1016/j.jmoneco.2021.09.004
  • Bollard, A., Klenow, P. J., & Sharma, G. (2013). Indiaʼs mysterious manufacturing miracle. Review of Economic Dynamics, 16(1), 59–85. https://doi.org/10.1016/j.red.2012.10.007
  • Brynjolfsson, E., & McAfee, A. (2014). The second machine age: Work, progress, and prosperity in a time of brilliant technologies. W.W. Norton & Company.
  • Cirera, X., Fattal-Jaef, R., & Maemir, H. (2020). Taxing the good? Distortions, misallocation, and productivity in Sub-Saharan Africa. The World Bank Economic Review, 34(1), 75–100. https://doi.org/10.1093/wber/lhy018
  • da Silva Vasconcelos, R. (2017). Misallocation in the Brazilian manufacturing sector. Brazilian Review of Econometrics, 37(2), 191–232. https://doi.org/10.12660/bre.v37n22017.61801
  • David, J. M., & Venkateswaran, V. (2019). The sources of capital misallocation. American Economic Review, 109(7), 2531–2567. https://doi.org/10.1257/aer.20180336
  • De Nicola, F., Loayza, N., & Nguyen, H. (2023). Productivity loss and misallocation of resources in Southeast Asia. Journal of the Asia Pacific Economy, 1–18. https://doi.org/10.1080/13547860.2023.2258015
  • Donati, C. (2016). Firm growth and liquidity constraints: Evidence from the manufacturing and service sectors in Italy. Applied Economics, 48(20), 1881–1892. https://doi.org/10.1080/00036846.2015.1109044
  • Fields, G. S. (2005). A guide to multisector labor market models. No. 32547. The World Bank.
  • Fowowe, B. (2017). Access to finance and firm performance: Evidence from African countries. Review of Development Finance, 7(1), 6–17. https://doi.org/10.1016/j.rdf.2017.01.006
  • Ghani, E., Kerr, W. R., & O’Connell, S. (2014). Spatial determinants of entrepreneurship in India. Regional Studies, 48(6), 1071–1089. https://doi.org/10.1080/00343404.2013.839869
  • Ghani, S. E., Kerr, W., & O’Connell, S. D. (2013). The exceptional persistence of India’s unorganized sector. World Bank Policy Research Working Paper (6454). https://doi.org/10.1596/1813-9450-6454
  • Gindling, T. H., & Newhouse, D. (2014). Self-employment in the developing world. World Development, 56, 313–331. https://doi.org/10.1016/j.worlddev.2013.03.003
  • Goldar, B. (2014). Productivity in Indian manufacturing in the post-reform period: A review of studies. In V. Kathuria, R. S. N. Raj, and K. Sen (Eds.), Productivity in Indian manufacturing (pp. 99–129). Routledge. https://doi.org/10.4324/9781315734040
  • Gupta, P., Hasan, R., & Kumar, U. (2009). Big reforms but small payoffs: Explaining the weak record of growth in Indian manufacturing. India Policy Forum 2008-09. http://dx.doi.org/10.2139/ssrn.1346042
  • Hasan, R., & Jandoc, K. R. (2010). The distribution of firm size in India: What can survey data tell us? Asian Development Bank Economics Working Paper Series, 213.
  • Hasan, R., Mitra, D., & Ramaswamy, K. V. (2007). Trade reforms, labor regulations, and labor-demand elasticities: Empirical evidence from India. The Review of Economics and Statistics, 89(3), 466–481. https://doi.org/10.1162/rest.89.3.466
  • Hsieh, C. T., & Klenow, P. J. (2009). Misallocation and manufacturing TFP in China and India. The Quarterly Journal of Economics, 124(4), 1403–1448. https://doi.org/10.1162/qjec.2009.124.4.1403
  • Jann, B. (2008). The Blinder-Oaxaca decomposition for linear regression models. The Stata Journal, 8(4), 453–479. https://doi.org/10.1177/1536867X0800800401
  • Jensen, M. C., & Meckling, W. H. (2000). Theory of the firm: Managerial behavior, agency costs and ownership structure. In R. I. Tricker (Ed.), Corporate governance (1st ed., pp. 77–132). Routledge. https://doi.org/10.4324/9781315191157
  • Kapoor, R. (2017). Waiting for jobs. Working Paper. No. 348. International Council for Research on International Economic Relations.
  • Kassenboehmer, S. C., & Sinning, M. G. (2014). Distributional changes in the gender wage gap. ILR Review, 67(2), 335–361. https://doi.org/10.1177/001979391406700203
  • Kathuria, V., Raj, R. S. N., & Sen, K. (2013). The effects of economic reforms on manufacturing dualism: Evidence from India. Journal of Comparative Economics, 41(4), 1240–1262. https://doi.org/10.1016/j.jce.2012.10.003
  • Khamis, M. (2013). Does the minimum wage have a higher impact on the informal than on the formal labour market? Evidence from quasi-experiments. Applied Economics, 45(4), 477–495. https://doi.org/10.1080/00036846.2011.605763
  • Khanna, R., & Sharma, C. (2021). Does infrastructure stimulate total factor productivity? A dynamic heterogeneous panel analysis for Indian manufacturing industries. The Quarterly Review of Economics and Finance, 79, 59–73. https://doi.org/10.1016/j.qref.2020.08.003
  • Krishna, K. L., Goldar, B., Aggarwal, S. C., Das, D. K., Erumban, A. A., & Das, P. C. (2018). Productivity growth and levels: A comparison of formal and informal manufacturing in India (Vol. 291). Centre for Development Economics, Delhi School of Economics.
  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1999). The quality of government. Journal of Law, Economics, & Organization, 15(1), 222–279. https://doi.org/10.1093/jleo/15.1.222
  • La Porta, R., & Shleifer, A. (2008). The unofficial economy and economic development. No. w14520. National Bureau of Economic Research.
  • La Porta, R., & Shleifer, A. (2014). Informality and development. Journal of Economic Perspectives, 28(3), 109–126. https://doi.org/10.1257/jep.28.3.109
  • Levine, O., & Warusawitharana, M. (2021). Finance and productivity growth: Firm-level evidence. Journal of Monetary Economics, 117, 91–107. https://doi.org/10.1016/j.jmoneco.2019.11.009
  • Little, I. M. D., Mazumdar, D., Page, J. M., & Mundial, B. (1987). Small manufacturing enterprises. Oxford University Press.
  • Maloney, W. F. (2004). Informality revisited. World Development, 32(7), 1159–1178. https://doi.org/10.1016/j.worlddev.2004.01.008
  • Manna, G. C. (2010). Current status of industrial statistics in India: Strengths and weaknesses. Economic and Political Weekly, 67–76. https://www.epw.in/journal/2010/46/special-articles/current-status-industrial-statistics-india-strengths-and-weaknesses
  • Marjit, S., & Maiti, D. (2009). Informality and productivity. India Macroeconomics Annual, 135–175. https://doi.org/10.1177/139156141001100213
  • Mazumdar, D., & Sarkar, S. (2013). Manufacturing enterprise in Asia: Size structure and economic growth. International Development Research Centre.
  • McKenzie, D., & Woodruff, C. (2014). What are we learning from business training and entrepreneurship evaluations around the developing world? The World Bank Research Observer, 29(1), 48–82. https://doi.org/10.1093/wbro/lkt007
  • Mehrotra, S., & Giri, T. (2019). The size structure of India’s enterprises: Not just the middle is missing. Working Paper No. 25. Azim Premji University, Bangalore, India.
  • Mishra, A. (2022). What sustains informality? A study of the interactions between formal and informal sector firms. The Journal of Development Studies, 58(7), 1403–1415. https://doi.org/10.1080/00220388.2022.2061853
  • Nataraj, S. (2011). The impact of trade liberalization on productivity: Evidence from India’s formal and informal manufacturing sectors. Journal of International Economics, 85(2), 292–301. https://doi.org/10.1016/j.jinteco.2011.07.003
  • Organization for Economic Co-operation and Development. (2007). OECD economic surveys: India. OECD Publishing. https://doi.org/10.1787/eco_surveys-ind-2007-en
  • Perry, E. G., Maloney, F. W., Arias, S. O., Fajnzylber, P., Manson, D. A., & Saavedra-Chanduvi, J. (2007). Informality: Exit and Exclusion. World Bank Publications.
  • Powell, W. W., & Colyvas, J. A. (2008). Microfoundations of institutional theory. In R. Greenwood, C. Oliver, T. B. Lawrence, and R. E. Meyer (Eds.), The Sage handbook of organizational institutionalism (1st ed., pp. 276–298). SAGE Publications Ltd. https://us.sagepub.com/en-us/nam/the-sage-handbook-of-organizational-institutionalism/book243619#preview
  • Rabbani, G., & Raj, R. S. N. (2023). Small firms in Indian manufacturing: Some stylized facts. Journal of the International Council for Small Business, 4(4), 374–386. https://doi.org/10.1080/26437015.2023.2190048
  • Raj, R. S. N., & Sen, K. (2015). Finance constraints and firm transition in the informal sector: Evidence from Indian manufacturing. Oxford Development Studies, 43(1), 123–143. https://doi.org/10.1080/13600818.2014.972352
  • Raj, R. S. N., & Sen, K. (2016). Out of the shadows? The informal sector in post-reform India. Oxford University Press.
  • Raj, R. S. N., & Sasidharan, S. (2021). Small firm ownership and credit constraints in India. Routledge India.
  • Rajan, R. G., & Zingales, L. (1998). Financial dependence and growth. The American Economic Review, 88(3), 559–586.
  • Restuccia, D., & Rogerson, R. (2008). Policy distortions and aggregate productivity with heterogeneous establishments. Review of Economic Dynamics, 11(4), 707–720. https://doi.org/10.1016/j.red.2008.05.002
  • Scott, W. R. (1987). The adolescence of institutional theory. Administrative Science Quarterly, 32(4), 493–511. https://doi.org/10.2307/2392880
  • Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217–226.
  • Singhi, M. C. (2000). Index of industrial production and annual survey of industries. Working Paper, unpublished.
  • Temple, J. (2005). Dual economy models: A primer for growth economists. The Manchester School, 73(4), 435–478. https://doi.org/10.1111/j.1467-9957.2005.00454.x
  • Ullah, B. (2020). Financial constraints, corruption, and SME growth in transition economies. The Quarterly Review of Economics and Finance, 75, 120–132. https://doi.org/10.1016/j.qref.2019.05.009
  • Ulyssea, G. (2020). Informality: Causes and consequences for development. Annual Review of Economics, 12(1), 525–546. https://doi.org/10.1146/annurev-economics-082119-121914
  • Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications. Free Press.
  • World Trade Organization. (2009). Globalization and informal jobs in developing countries: A joint study of the International Labour Office and the Secretariat of the World Trade Organization. https://www.wto.org/english/res_e/booksp_e/jobs_devel_countries_e.pdf
  • Yun, M. S. (2005). A simple solution to the identification problem in detailed wage decompositions. Economic Inquiry, 43(4), 766–772. https://doi.org/10.1093/ei/cbi053

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.