Is Informal Normal ?

Towards More and Better Jobs in Developing Countries

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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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Concepts, Measurement and Trends

OECD Development Centre

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.

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