Impact of Trade Liberalisation on the Informal Sector of An Economy - Inferences from Macroeconomic Data and a Case Study

Abstract

This paper seeks to understand the informal sector and summarises the theoretical work done by scholars in the field. Starting with the movement of labour across formal and informal sector multi-segmented labour markets, it then tries to understand the impact that trade liberalisation has on informal sector. The paper concludes with data on urban informal employment from India and a case study of the impact of exposure to international trade on the garment industry in Tiruppur district of Tamil Nadu.