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Citation Information

Type Conference Paper - Thirteenth International Conference on Input-Output Techniques
Title SAM multiplier analysis of informal households: Application to an Indian archetype economy
Publication (Day/Month/Year) 2000
City Macerata
Country/State Italy
URL http://policy.rutgers.edu/cupr/iioa/SinhaInformalHouseholds.pdf
In this paper we study the effects of major policy changes on the informal output and more particularly on "informal households" through a SAM framework. The informal households are identified as they might be characterized by a sense of uncertainty they have for the future that might be reflected in their economic decisions. The concern in this study is to identify the social category of people who are outside of a formalized and therefore more secured means of livelihood. This sector then would comprise not only of people who are involved in unregistered enterprises, but also those who are involved in unregulated activities within the formal sectors. The members of this sector are the owners and workers in household enterprises, both paid and unpaid, workers in informal activities as well as casual workers in formal sectors. The classifications of households are of crucial importance in a SAM analysis. Analysis on inequality, even poverty, is usually based on subgroup averages, and thus depends very much on how the population has been subdivided. So a meaningful subdivision of population into homogenous groups is of major importance. Further, integrating distribution statistics into a SAM considerably increase their reliability as well as their relevance (SNA, 1993). The SAMs focus particularly on the distribution of income through disaggregation of household sector
income and outlay. In capturing data about the informal sector, as noted household would be a composite unit providing such information through member activity. Households can be involved in any kind of economic activity in addition to being units demanding final goods as consumers. In this respect households will be more varied than any other institution whose activities would be restricted to the purpose for which they are created. Members of household play a major role in production by either operating their own unincorporated enterprises or by supplying labor to other unincorporated or corporate enterprises by providing their services to them (SNA, 1993).

The findings thorough the SAM multiplier analysis undertaken in this exercise shows that sectors like agriculture, manufactured food products, textiles, wood, leather and construction have relatively much higher informal income multiplier effect. This reflects the high informal labor contribution in these sectors apart from other indirect effects via the consumption pattern. This study thus can identify sectors that have higher interconnection with the informal sector and informal households, and can be used for simulation exercises with different policy options recognizing the effect of these on the welfare of the informal households.

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