Development Centre Studies

OECD Development Centre

1990-0295 (online)
1563-4302 (print)
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This series of monographs from the OECD Development Centre covers development issues generally and in some cases issues in specific countries. It  includes Angus Maddison’s books containing long-term historical estimates of GDP for various areas of the world.

Also available in French, Spanish
Is Informal Normal ?

Is Informal Normal ?

Towards More and Better Jobs in Developing Countries You do not have access to this content

OECD Development Centre

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Johannes Jütting, Juan R. de Laiglesia
24 Mar 2009
9789264059245 (PDF) ;9789264059238(print)

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The informal sector deprives states of revenues and workers of social protection. It also, however, frequently constitutes the most dynamic part of the economy and creates massive employment. Informal employment is ubiquitous and growing. The financial crisis that began in 2008 has made the management of informal employment even more challenging.  Responding to this emerging challenge is critical, not only for the well being of millions of workers but also for social development. Is Informal Normal? provides evidence for policy makers on how to deal with this issue of crucial importance for developing and developed countries alike. This book includes StatLinks, URLs linking charts and graphs to Excel files containing the data.

"In countries such as China, the exceptional scale of rural to urban migration amplifies the challenges from informality. This work provides valuable analytical results for understanding this major transformation, its problems and impacts."

                       -Professor Li Shi, Beijing Normal University

"This volume is an important contribution to the current policy debates on the informal economy. It recommends providing support to the working poor in the informal economy, making formal structures more efficient and flexible and creating more formal jobs."

                      -Professor Marty Chen, Harvard Kennedy School and WIEGO

"The strengths of this volume are many: evidence that "Informal Is Normal;" references to many newer studies and ways of thinking; the consistent three-pronged strategy; accessibility. Is Informal Normal? will serve as a reference in the literature on informality for years to come."

                      -Professor Gary Fields, Cornell University

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  • Executive Summary
    This volume shows that most workers in the developing world are employed informally: without access to developed social security mechanisms, they are particularly vulnerable and face increasingly severe risks. Their numbers are likely to grow in times of economic crisis, as informal employment plays the role of a buffer, providing families with an alternative source of income.
  • Employment, Poverty Reduction and Development

    The main aim of this volume is to initiate a policy dialogue on how to deal with this phenomenon. It makes three main contributions to the policy debate. First, it presents comparable data on the evolution of informal employment and its most significant components for a wide array of countries and over time. Second, it discusses what determines informal employment, its persistence over time, and its gender dimension. It also considers the strategies of individual workers in seeking to increase their earnings within informal employment and across the divide between informal and formal employment. Third, it argues for a three-pronged strategy better to deal with informal employment and its consequences.

  • Concepts, Measurement and Trends
    Measuring informal employment has remained a challenge and requires the use of a variety of sources and methods, including the use of data for self-employment as a proxy indicator. Although patterns are not uniform, informal employment persists at a high level in all parts of the developing world, with the highest level seen in sub-Saharan Africa where more than twothirds of people in the non-agricultural sector are working in informal jobs. Important gender differences can be seen in informal employment, with patterns in job status and earnings differing distinctly between men and women. Moreover, the differences in earnings between formal and informal work depend on the job status with informal entrepreneurs being better off relative to informal employees.
  • Persisting Informal Employment: What Explains It?
    Why do informal employment and its associated poverty persist? It might be thought that economic growth would bring a switch into more formal and therefore secure jobs but it is far from clear that this is necessarily the case. Some observers suggest that there are not enough formal jobs to go round; others that the informal sector is more dynamic; yet others that regulations and bureaucracy are disincentives to a move into the formal sector. Part of the answer may lie in the existence of two distinct informal labour markets with some workers voluntarily opting for the informal sector. The relationships between growth, poverty and informal employment are complex and becoming more so with the emergence of global commodity chains. Does growth encourage informality or does informality spur growth? There are reasons to believe that growth may not be enough to reduce informal employment.
  • Women in Informal Employment
    Hundreds of millions of women work around the world but the types of job they do are often informal, of lower quality, worse paid and more precarious than those performed by men. They face cultural, social and legal obstacles. They are often casualties of economic structuring. 
  • Moving Out of Bad Jobs
    One way for the poor to improve their living standards is to move from bad jobs to better ones. That can involve switching within sectors, between them, or from one place to another. This mobility is not an option for everyone and many barriers exist: nor is it necessarily the case that leaving one job for another will automatically bring extra earnings. But there is more mobility in informal employment than might be expected and overall in many cases mobility for the poor does increase their earnings. Integrated policy frameworks spanning employment, social policies and migration are needed in order to ease the transition to better jobs.
  • Dealing With Informal Employment
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