Title: Inflow of Educational Capital, Intermediation and Informal Sector
Abstract:Informal sector comprising unrecorded, unregistered activities in developing economies of the world is a common feature in present scenario. The existence of such sectors in an economy clearly reflect...Informal sector comprising unrecorded, unregistered activities in developing economies of the world is a common feature in present scenario. The existence of such sectors in an economy clearly reflects the weakness of the government to provide employment opportunities for all. Such informal activities are again facilitated through the extortionists who are bribed by informal producers. Under such an economic structure, this chapter investigates the effect of inflow of educational capital on endogenously determined factor prices and output of formal and informal sectors of an economy. Though there is no change in the factor earnings, an inflow of educational capital gives a boost to the output of skilled sector irrespective of factor intensity assumption, whereas the output of formal sector depends on the factor intensity assumption. But quite interestingly, no change is seen in the output of informal sector. On the other hand, the inflow of educational capital leads to dampening of intermediation activities which is a positive result, and hence this can help the policy-makers to choose the right path of development.Read More