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informality

Re-thinking informality: It’s all in the details

Andreja Marusic's picture

Informality is the subject of many a report, study, intervention, policy brief, political agenda and fireside chat, and due to its prevalence, rightfully so. In emerging and developing economies, the informal sector accounted for 32% of GDP and 70% of employment in 2016. This is a concern because informal firms tend to be less productive than formal firms and pay workers less than their formal counterparts. Reversing informality is enticing and promises rewards in the form of potential tax revenues, productivity gains, and poverty eradicating capabilities.  But the quest to bring more firms and workers into the formal sector has proven to be complex.

Does efficient corruption pay?

Mohammad Amin's picture

Buying and selling a product or service involves a number of costs, including time spent searching for the best prices, negotiating for good discounts, researching product quality and writing contracts where applicable. Broadly, these are called the transaction costs of economic exchange, and part of the reason firms exist is to keep transaction costs at a minimum.

Quantifying informality in Latin America

Mohammad Amin's picture

In a series of earlier posts, I discussed a number of findings about informal (unregistered) firms in 6 African countries, including Burkina Faso, Cote d’Ivoire, Cape Verde, Cameroon, Madagascar and Mauritius. These findings were based on Informality Surveys collected by the Enterprise Analysis Unit to better understand the functioning of the informal sector—a large sector for which we have virtually no systematic data.

Regime Type: Do private firms have a preference?

Mohammad Amin's picture

One can reasonably expect that frequent and unpredictable changes in economic policy might adversely affect investment by the private sector and the overall growth of the economy. For all practical purposes, uncertainty about future economic policies is a step towards economic anarchy. But precisely what causes firms in some countries to have higher uncertainty about future economic policies than others? Does the underlying political structure matter? What elements of the political structure, if any, matter for the level of policy uncertainty as perceived by private agents?

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