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Informal sector

About: Informal sector is a(n) research topic. Over the lifetime, 12052 publication(s) have been published within this topic receiving 212182 citation(s). more

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Journal ArticleDOI
Abstract: This article originated in the study of one Northern Ghanaian group, the Frafras, as migrants to the urban areas of Southern Ghana. It describes the economic activities of the low-income section of the labour force in Accra, the urban sub-proletariat into which the unskilled and illiterate majority of Frafra migrants are drawn.Price inflation, inadequate wages, and an increasing surplus to the requirements of the urban labour market have led to a high degree of informality in the income-generating activities of the sub-proletariat. Consequently income and expenditure patterns are more complex than is normally allowed for in the economic analysis of poor countries. Government planning and the effective application of economic theory in this sphere has been impeded by the unthinking transfer of western categories to the economic and social structures of African cities. The question to be answered is this: Does the ‘reserve army of urban unemployed and underemployed’ really constitute a passive, exploited majority in cities like Accra, or do their informal economic activities possess some autonomous capacity for generating growth in the incomes of the urban (and rural) poor? more

2,267 citations

01 Jan 1988-
Abstract: This book provides an accessible, balanced account of the insider-outsider theory of labor market activity. It focuses on how "insiders" (incumbent employees whose jobs are protected by various labor turnover costs) get market power, what they do with that power, and how their activities affect the "outsiders" (who are either unemployed or work in the informal sector). The book examines the effects of insiders' activities on wages, employment, and unemployment; discusses the associated policy implications; and relates the insider-outsider theory to other theories of labor market activity.The central part of the book consists of a series of previously published articles that have been edited to convey a single coherent account of the insider-outsider theory. Chapters are preceded by overviews summarizing the main ideas and relating them to the book's underlying theme.Assar Lindbeck is Professor of International Economics and Director of the Institute of International Economics at the University of Stockholm. Dennis J. Snower is Professor of Economics, Birkbeck College, University of London. more

1,162 citations

Journal ArticleDOI
Jonathan Gershuny1Institutions (1)
01 Feb 1979-Futures
Abstract: This article continues a line of argument, initiated in Futures∗, suggesting that a wide range of services which were once produced in the money economy are increasingly provided informally—on a self-service basis. The informal economy contains a diverse collection of activities that may be divided into three categories: the household, the communal, and the underground. This last in turn covers a wide range, from outright theft, to tax evasion and moonlighting. Government taxation and welfare policies, changes in lifestyles, and the self-service economy combine to make the informal economy a sector of growing importance. Governments have three options: they can ignore the informal economy, suppress it, or exploit it. The last appears preferable, but would require some initiatives from the state. more

1,018 citations

Journal ArticleDOI
Abstract: This paper analyzes the relationship between the relative size of the small and medium enterprise (SME) Sector and the business environment in 76 countries. The paper first describes a new and unique cross-country database that presents consistent and comparable information on the contribution of the SME sector to total employment in manufacturing and GDP across different countries. We then relate the importance of SMEs and the informal economy to indicators of different dimensions of the business environment. We find that several dimensions of the business environment, such as lower costs of entry and better credit information sharing are associated with a larger size of the SME sector, while higher exit costs are associated with a larger informal economy. more

971 citations

Posted Content
Norman Loayza1Institutions (1)
Abstract: An increase in the size of the informal sector hurts growth by reducing the availability for public services for everyone in the economy and increasing the number of activities that use some existing public services less efficiently or not at all. Loayza presents the view that informal economies arise when governments impose excessive taxes and regulations that they are unable to enforce. Loayza studies the determinants and effects of the informal sector using an endogenous growth model whose production technology depends essentially on congestable public services. In this model, changes (in both policy parameters and the quality of government institutions) that promote an increase in the relative size of the informal economy will also generate a reduction in the rate of economic growth. Using data from Latin American countries in the early 1990s, Loayza tests some of the model's implications and estimates the size of the informal sector in these countries - identifying the size of the informal sector to latent variable for which multiple causes and indicators exist. The results suggest that: The size of the informal sector depends positively on proxies for tax burden and restrictions on the labor market. It depends negatively on a proxy for the quality of government institutions. An increase in the size of the informal sector hurts growth by reducing the availability of public services for everyone in the economy and by increasing the number of activities that use some existing public services less efficiently or not at all. This paper - a product of the Macroeconomics and Growth Division, Policy Research Department - is part of a larger effort in the department to examine the determinants of economic growth. more

936 citations

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No. of papers in the topic in previous years

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Topic's top 5 most impactful authors

Colin C. Williams

332 papers, 8.9K citations

Sarbajit Chaudhuri

47 papers, 492 citations

Ceyhun Elgin

36 papers, 446 citations

Ioana Alexandra Horodnic

30 papers, 527 citations

Sara Nadin

29 papers, 917 citations