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South Asia Economic Journal
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Capital Mobility and Informal Wage in a Small Economy—Two Examples

Sugata Marjit

Centre for Studies in Social Sciences, Calcutta, smarjit{at}hotmail.com

Saibal Kar

Centre for Studies in Social Sciences, Calcutta. R 1, B.P. Township, Kolkata 700 094, saibal{at}cssscal.org

Punyabrata Sarkar

Calcutta Metropolitan Development Authority, Kolkata, punyabratasarkar{at}hotmail.com

We conduct two policy experiments in a general equilibrium framework with an informal sector. The first deals with a liberal trade policy and the second with a decline in the unionized wage rate. In both cases, informal workers gain if capital moves between the formal and the informal segments and lose if it does not. These results are independent of the factor intensity rankings of the sectors. Both of these results have important policy implications.

Key Words: Informal Wage • Capital Mobility • Trade Reform • Labour Union • Economic Welfare

South Asia Economic Journal, Vol. 5, No. 2, 261-266 (2004)
DOI: 10.1177/139156140400500204
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