Recessionary Shock and the Informal Sector – Implication for Intermediation

In this globalized world, economic shock of any form is not very unassuming event. One such event is global economic recession of some sort like what we experienced in 2009. Hence, this chapter attempts to give an idea about the upshot of a recessionary phase on the intermediation activity which is required for the survival of the informal sector of a society. Remember that the informal part of the economy covers a large chunk of the total economic activities in any developing economy. Therefore, it is imperative to check the possible consequences of recession on this subdivision because intermediation also requires unskilled work force which need to be pulled out from the productive spectrum. In such a framework, it has been shown that a recessionary shock may induce an expansion in intermediation activity under certain factor intensity assumption.