Abstract
This chapter makes an attempt to estimate the index of informal sector employment that can be attributed to the supply-push phenomenon. Factors explaining the interstate variations in this index include the industrial-informal sector wage gap, revenue expenditure and development expenditure incurred by the government. Increased development expenditure brings a decline in distress-led informalization because education, health and infrastructure facilities tend to enhance the employability of an individual. However, education as such does not reduce the residual absorption in the informal sector unless there is improvement in quality. This chapter also notes an increase in inequality with an increase in distress-led informalization. Adoption of labour-intensive technology in the organized or formal industrial sector is indeed crucial for pro-poor growth. The other policy implication is in terms of enhanced investment in the areas of human capital formation and overall development of the region.
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Maiti, D., Mitra, A. (2013). Informality, Vulnerability and Development. In: Siddharthan, N., Narayanan, K. (eds) Human Capital and Development. Springer, India. https://doi.org/10.1007/978-81-322-0857-0_4
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