We express a doubt on the conventional wisdom namely, of a positive relationship between wage and productivity, of a formal sector firm in a developing economy where the firm can either go for subcontracting to the informal sector to minimize wage cost along with apprehension of extra-legal cost...

As a country progressively engages in international trade, its factors of production will enter increasingly into the export sector, where their return is higher, compared to the import competing sector. At the regional level too those states, which can attune their production structure to...

While a large body of researches discusses the effects of international subcontracting on firm dynamics, the present work deals with the similar issues of a domestic firm who subcontracts to the informal sector in a typical developing world. Theoretically, we develop a model that if the formal...

Recent papers, discussing the impact of economic reform in India, argue that the positive effect of reform is more significant in states, which are not ‘labor friendly’. Also labor market reforms seem to be a pre-condition for success of liberal policies as far as their impact on poverty is...

The paper provides an explanation of recent empirical evidence on fragmentation and the expansion of the informal sector in India. We argue that as the prospect of getting a better price in the international market increases, the producers in the formal sector act more like merchants and...