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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Persisting Informal Employment: What Explains It?

OECD Development Centre

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.

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