View Comments

Capacity Utilization, Income Distribution, and the Urban Informal Sector: An Open-Economy Model

March 1, 2002

Kendall K. Schaefer 

Abstract: An Open-Economy Model." Developing economies worldwide have experienced rapid informal sector expansion in response to formal sector unemployment. However, the macroeconomic e ects of formal-informal sector dualism have been widely overlooked. This paper develops a two-sector, structuralist, macroeconomic model to analyze the impact of urban informal sector activity on export-led growth policy. The model uses stylized facts from the Johannesburg informal sector and is applicable to countries where informal sector production is concentrated in low-wage goods and commercial services. The paper finds that trade-o s between capacity utilization and reduced income inequality could be magnified when the existence of an urban informal sector is incorporated.

External Link:

Read More: Cities, Debt, Development, Economy, Environment, Finance, Jobs, Poverty

blog comments powered by Disqus

Site Search

Global Research Engine

This search includes our Core Network partners.

Join Our Mailing Lists

The Journal