USP Electronic Research Repository

Subcontracting,R&D and labour productivity: a theoretical explanation

Maiti, Dibyendu S. and Marjit, Sugata (2011) Subcontracting,R&D and labour productivity: a theoretical explanation. Journal of Economic Development, 36 (3). pp. 1-24. ISSN 0254-8372

[img] Plain Text (JED) - Published Version
Download (216Kb)

    Abstract

    While a large body of researches discusses the effects of international subcontracting on firm dynamics, the present work deals with the similar issues of a domestic firm who subcontracts to the informal sector in a typical developing world. Theoretically, we develop a model that if the formal sector wage is higher than that of informal sector, the choice of informal sector subcontracting and in-house R&D investment appears to be alternative options to the firm to bypass expensive labour in the formal sector. We argue that the R&D and labour productivity in formal sector are highly influenced by the informal wage but not the formal sector one. Since the subcontracting can raise both supply and demand for informal workers due to a rise of formal sector wage, the movement of informal sector wage is uncertain and thereby, the formal sector R&D and labour-productivity are also ambiguous. Thus, countries with a vast segment of lowly-paid informal workers exhibit lowly-productive formal workers.

    Item Type: Journal Article
    Subjects: H Social Sciences > H Social Sciences (General)
    Divisions: Faculty of Business and Economics (FBE) > School of Economics
    Depositing User: Unnamed user with email dibyendu.maiti@usp.ac.fj
    Date Deposited: 09 Aug 2011 09:44
    Last Modified: 06 May 2013 09:22
    URI: http://repository.usp.ac.fj/id/eprint/5075
    UNSPECIFIED

    Actions (login required)

    View Item

    Document Downloads

    More statistics for this item...