Chandril Bhattacharyya, Delhi School of Economics
Centre for Development Economics
and
Department of Economics, Delhi School of Economics
ANNOUNCE A SEMINAR
Informality, Governance and Growth
by
Chandril Bhattacharyya
Delhi School of Economics
On
30th November, 2017 (Thursday) at 3:00 PM
Venue : Seminar Room (First Floor)
Department of Economics, Delhi School of Economics
All are cordially invited
Abstract
This papers develops a framework of endogenous growth to show how a typical developing economy with labour union in formal sector faces a trade-off of redistributive measures between subsidy to informal sector and strategic weak governance to optimise growth and welfare. We find that a deliberated weak governance can raise the economic growth rate. The growth rate at the highest level of governance is lower than that at relatively lower level of governance. The growth rate maximising level of governance varies inversely with subsidy rate and labour union’s bargaining power. However, when the government does not finance any subsidy, the growth rate maximising level of governance becomes independent of union’s bargaining power. If the government raises subsidy rate and wants to keep the growth rate constant, then it should decrease (do not change) (increase) the level of governance if the existing governance is higher than (equals to) (lower than) the growth rate maximising level of governance corresponding to the existing subsidy rate. Moreover, the welfare maximising level of governance is different from the growth rate maximising level of governance.