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OECD Development Centre Working Papers

The OECD Development Centre links OECD members with developing and emerging economies and fosters debate and discussion to seek creative policy solutions to emerging global issues and development challenges. This series of working papers is intended to disseminate the OECD Development Centre’s research findings rapidly among specialists in the field concerned. These papers are generally available in the original English or French, with a summary in the other language.
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Informal employment and the social contract

An individual-level perspective

This paper empirically tests whether individual-level informality status is linked to a weak social contract, as measured through individual perceptions of its various aspects. Accounting for workers’ heterogeneity and a possible simultaneity between informality status and attitudes towards institutions, the paper shows that informal workers are systematically more dissatisfied with the social contract, as compared to formal workers. The paper enriches the literature by looking at a broad range of aspects of the social contract. The results show that informality is associated with a lower level of confidence in labour unions, in parliament, in civil services; a lower satisfaction with the healthcare system, the way the government performs its duties, the quality of healthcare, and the city setting. The paper concludes with some policy implications.

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Keywords: informality, social contract, institutions
JEL: N35: Economic History / Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy / Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Asia including Middle East; J21: Labor and Demographic Economics / Demand and Supply of Labor / Labor Force and Employment, Size, and Structure; P16: Economic Systems / Capitalist Systems / Capitalist Systems: Political Economy; O17: Economic Development, Innovation, Technological Change, and Growth / Economic Development / Formal and Informal Sectors; Shadow Economy; Institutional Arrangements; E26: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Informal Economy; Underground Economy; D63: Microeconomics / Welfare Economics / Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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Author(s)
Mariya Aleksynska and Emilie Wojcieszynski

27 Apr 2022

43 pages

No. 348

https://doi.org/10.1787/75381956-en

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