Trade Reforms, Labour Market Reforms, Informal Wages, and Poverty

Sugata Marjit and Saibal Kar

in The Outsiders

Published in print March 2011 | ISBN: 9780198071495
Published online September 2012 | e-ISBN: 9780199081257 | DOI:
Trade Reforms, Labour Market Reforms, Informal Wages, and Poverty

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This chapter examines the connection between trade liberalization and poverty reduction, with a particular focus on informal sector workers in cities and towns of the developing world. More specifically, it looks at the channel between how trade reforms affect urban informal workers and how that in turn affects urban poverty. It offers a general equilibrium model relating international trade, informal sector, and poverty with a wider reach. The theoretical result predicts that informal wages should increase if there is trade liberalization and that there would be an expansion in the urban informal industrial base. The aggregate empirical exercise tests growth in informal wages and estimates if wage growth is capable of reducing urban poverty.

Keywords: trade liberalization; tariff reduction; poverty reduction; informal workers; developing countries; trade reforms; labour market reforms

Chapter.  9972 words. 

Subjects: Economic Development and Growth

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