A burning issue at the current stage of development seems to be a quantitative
assessment of the impact economic reform in India. Since it is impossible to
judge such an impact for all possible economic and social variables, particularly
when one needs to control for a wide range of parameters, it will be instructive
to focus on a particular theme. The theme we pick up in this paper is informal
wage. There is some evidence that the aggregate informal employment is on
the rise. Contraction of the formal segment and an expansion in the informal
sector does not necessarily mean that workers in the informal sector are worseoff
in the post-reform period. Basic economics suggests that one must look at
the real informal wage to draw any conclusion. We provide alternative theoretical
structures where the relationship between the informal wage and employment
can be rigorously analysed. Our theoretical conjectures roughly match with the
available NSS data on informal manufacturing applied at the aggregate level
for India.