THE ROLE OF THE INFORMAL SECTOR IN THE MIGRATION PROCESS: A TEST OF PROBABILISTIC MIGRATION MODELS AND LABOUR MARKET SEGMENTATION FOR INDIA *

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Abstract
A basic hypothesis of probabilistic migration models is that informal sector employment is a temporary staging post for new migrants on their way to formal sector employment. In this paper we argue that there are no conclusive tests of this hypothesis in the empirical migration literature, and examine evidence from a sample survey to test if the informal sector in Delhi performs the role postulated in probabilistic models. We also test some of the main hypotheses of the segmented labour market theory, a popular alternative to neo-classical theory for analyzing the structure of urban labour market in developing countries. The empirical evidence indicates that the migration process postulated in probabilistic models does not seem to be realistic in the case of Delhi, and that the segmentation model is only partially valid. Over one-half of the informal sector entrants had been attracted to Delhi by opportunities in this sector itself; actual and potential mobility from the informal to the formal sector was low; education and urban experience were rewarded at the same rate in both sectors; and education was one of the important determinants of mobility between sectors.

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