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Design and Measuring of the Informal Sector Index in China: on the Relationship between the Informal Sector and Economic Growth |
SHEN Xiao dong,LI Jin chang |
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Abstract In this article, based on the system of national accounts, we design and calculate the index of informal sector in China from 1990 to 2009 using statistical index theory and integrative evaluation technique including investment, consumption, employment and finance. Then, we discuss the relationship between the development of informal sector and economic growth by econometrics measurement such as co-integration test, Grange causality test, error correct model. The result suggest that: From 1990 to 2009, the annual informal sector growth rate in China averaged 20.5%, which is higher than economic growth about 10.2 percentage point; The growth of informal sector is instable because of the character of the lower capability to withstand risks and less governmental regulation; The development of informal sector and economic growth are positive co-integrated, the elasticity coefficient is below 0.1. Two-way Grange causality exist between the development of informal sector and economic growth.
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Received: 06 May 2011
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Corresponding Authors:
LI Jin chang
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