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Book Chapter
Conclusion: What the COVID-19 Crisis Tells Us about the Future of Informal EmploymentPart of Book COVID-19 and the Informal Economy
This project looks at what we know about the patterns and drivers of informality. It will provide knowledge for better policy-making with respect to the informal sector, by understanding the causes and consequences of informality.
In classical accounts of economic development, economic growth is seen to be accompanied by a decline in the informal sector. Yet, in most developing countries the informal sector remains a persistent phenomenon in spite of rapid economic growth in recent decades. Pervasive informality is particularly widespread in sub-Saharan Africa and South Asia, and less so in East Asia and Latin America, whether informality is defined as lack of firm registration, lack of social security coverage or lack of an employment contract. With ‘premature deindustrialization’ and the growth of the informal service sector, it seems likely that the trajectory towards informalization in low- and middle-income countries may be intensified in the future. Much of the working poor reside in the informal sector, working in their own enterprises or employed as casual wage labour in poorly paid jobs. In addition, women are more likely to be in the informal sector, either working as unpaid workers in the enterprises headed by the males in their households, or in poorly paid casual jobs in the informal sector.
The challenge for policy makers is then to find ways to encourage the movement of workers from the informal sector to the more productive formal sector, and concurrently provide opportunities for more dynamic informal firms to grow, and for those working in these firms to achieve decent and remunerative work.
Key questions
- Why do we see different patterns of informality across the developing world? What explains the high prevalence of informality in sub-Saharan Africa and South Asia, as compared to East Asia and Latin America?
- How can women workers in the informal sector witness an increase in the returns to their labour and are more able to move to better paid jobs in the formal sector? What constrains the growth of female-headed informal enterprises, and how can the incidence of unpaid work by women workers in male-headed informal enterprises be decreased?
- What do we know about the policy interventions that can contribute to livelihood enhancement for informal workers and households? What is the likelihood of informal firms and households making a transition to the formal sector, and what kind of policies are more likely to help in this transition?
- How does informality interact with urbanization, and how does the rapid and unplanned growth of cities in Africa and Asia deepen processes of informality? How can urban planning processes provide a more enabling environment for the growth of the more dynamic informal enterprises and, at the same time, lessen the inequality-enhancing effects of pervasive informality?
Watch this space
All papers, data, opinion pieces and opportunities to engage relating to this project will be available on this webpage. The project will be launched in an inception workshop held at UNU-WIDER on 8 February 2019, which will set out the research agenda and modalities of the project going forward.
UN’s 2030 Agenda for Sustainable Development
The project centrally addresses SDG1 (No Poverty), SDG5 (Gender Equality), and SDG8 (Decent Work and Economic Growth).
Team
Focal points: Michael Danquah, Tim Gindling, Gary Fields
Core researchers: Kunal Sen, Simone Schotte
Project support: Riikka Aartola
Communications: Ruby Richardson
Quicklinks
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Book Chapter
Reflections on Informal Employment, COVID-19, and the FuturePart of Book COVID-19 and the Informal Economy
Book Chapter
Informal Employment and an Inclusive RecoveryPart of Book COVID-19 and the Informal Economy
Book Chapter
Impact of COVID-19 on Urban Vulnerable LivelihoodsPart of Book COVID-19 and the Informal Economy
Book Chapter
South Africa’s Informal Economy and COVID-19Part of Book COVID-19 and the Informal Economy
Book Chapter
Impact of COVID-19 on Employment and Earnings in GhanaPart of Book COVID-19 and the Informal Economy
Book Chapter
Impact of the COVID-19 Pandemic on EmploymentPart of Book COVID-19 and the Informal Economy
Journal Article
The gendered impact of digital jobs platformsTHIS ARTICLE IS ON EARLY VIEW | This study examines the impact of digital labor-market platforms on jobs outcomes using a randomized encouragement design embedded in a longitudinal survey of Mozambican technical-vocational college graduates. We...
Book
COVID-19 and the Informal EconomyA key challenge for the post-COVID global economy is whether the disproportionate impact of the crisis on informal workers, who form the majority of the world’s workforce, will be acknowledged. Or whether harmful and negative stereotypes will persist...
Journal Article
Does the depth of informality influence welfare in urban sub-Saharan Africa?We explore the relationship between household welfare and informality, measuring household informality as the share of members’ activities (hours worked or income) without social insurance. We discretize these measures into four bins or portfolios...
Blog
Stuck at the bottom of the job ladder in Africa: The stumbling block to resilient growth and prosperity
When the question of creating good jobs and decent work in Africa arises, policymakers and development partners often focus on formalization. For...
Blog
UNU-WIDER’s new Massive Open Online Course (MOOC) advances progress on SDG 8: Decent WorkUNU-WIDER’s 6-week online course on delivering Sustainable Development Goal 8 (SDG 8) brings together recent research on the linkages between economic...
Working Paper
Impact of the COVID-19 pandemic on employmentThis paper provides a comparative summary of recent national statistics from five Latin American countries on employment losses and gains during the peak COVID-19 years compared with pre-pandemic levels. As part of its work on the impact of the...
Working Paper
Social protection, the COVID-19 crisis, and the informal economyThis paper considers the implications of COVID-19 relief measures for the building and extension of comprehensive and universal social protection systems. It highlights three key areas emerging from the crisis, which are likely to affect the shape of...
Working Paper
Informal employment: what is missing from national economic recovery plans?Throughout 2021, fiscal stimulus packages were introduced to jump-start the COVID-19 ‘post-pandemic’ economic recovery process. While calls for economic recovery packages that promise to ‘build back better’ have come from many directions, the under...
Working Paper
The uneven path to recoveryCOVID-19 cases were first confirmed in March 2020 in Ghana, Kenya, and South Africa. These countries put in place several stringent measures, including lockdowns, to contain the spread of the virus. Various policies were also rolled out to address...
Journal Article
The labour market impact of COVID-19 lockdownsIn this study, we provide causal evidence of the immediate and near-term impact of stringent COVID-19 lockdown policies on employment outcomes, using Ghana as a case study. We take advantage of a specific policy setting, in which strict stay-at-home...
Working Paper
Employment transitions with high unemployment and a small informal sectorThis paper examines employment transitions in the South African labour market. Using the Post-Apartheid Labour Market Series, it analyses flows between the formal sector, informal sector, and unemployment, paying specific attention to how these flows...
Book Chapter
The dynamics of off-farm self-employment in the West African SahelPart of Book The Job Ladder
Policy Brief
Climbing the job ladderMost workers in developing countries work in the informal labour market Lower-tier informal work leads to a dead end in the countries in this study, with little opportunity to move up the job ladder While those in upper-tier informal work are the...
Book Chapter
Cameroon's informal labor marketChapter in book: Oxford Handbook of the Economy of Cameroon Cameroon’s informal labor market largely harbours female workers, engaged mainly in low-productivity and low-paying jobs. We investigate the sticky-floor - a wider earnings-gap at the top...
Journal Article
The gendered crisisThis article studies the impact of the COVID-19 pandemic on the gendered dimensions of employment and mental health among urban informal-sector workers in Delhi, India.First, the study finds that men’s employment declined by 84 percentage points...
Journal Article
The livelihood impacts of COVID-19 in urban South AfricaThis paper investigates the impact of the COVID-19 pandemic and related policy measures on livelihoods in urban South Africa. Using qualitative research methods, we analyse two rounds of semi-structured phone interviews, conducted between June and...
Book
The Job LadderUsing a range of countries from the Global South, this book examines heterogeneity within informal work by applying a common conceptual framework and empirical methodology. The country studies use panel data to study the dynamics of worker...
Journal Article
When the Lewisian dream soursThe COVID-19 pandemic has escalated processes of labour transition from industrial work to the informal economy, which have always characterized the life of the working poor. This study explores this kind of reverse transition, that is, when the...
Journal Article
Internal migration and crime in BrazilEmpirical evidence suggests that the social effects of internal migration may be substantially different from those associated with the arrival of international migrants. In this study the author provides the first evidence of the effect of internal...
Blog
Digital platforms and job search: Experimental evidence from MozambiqueDigital technologies can be deployed to improve job search, but their effectiveness in practice is disrupted. This column uses experimental data to...
Working Paper
Who was impacted and how? COVID-19 pandemic and the long uneven recovery in IndiaWe investigate the impact of the COVID-19 pandemic on income levels, poverty, and inequality in both the immediate aftermath and during the uneven recovery until December 2021 using high-frequency household survey data from India. We find that the...
Working Paper
Employer power and employment in developing countriesThe issue of employer power is underemphasized in the development literature. The default model is usually one of competitive labour markets. This assumption matters for analysis and policy prescription. There is growing evidence that the competitive...
Journal Article
Informality and pension reforms in BoliviaPart of Journal Special Issue What sustains informality
Journal Article
Precarization or protection?Part of Journal Special Issue What sustains informality
Journal Article
Informality and firm performance in MyanmarPart of Journal Special Issue What sustains informality
Journal Article
Job quality and labour market transitionsPart of Journal Special Issue What sustains informality
Journal Article
Ethnic diversity and informal work in GhanaPart of Journal Special Issue What sustains informality
Working Paper
Labour market effects of digital matching platformsCan digital labour market platforms reduce search frictions in either formal or informal labour markets? We study this question using a randomized experiment embedded in a tracer study of the work transitions of graduates from technical and...
Blog
Can access to finance spur entrepreneurship in Indian informal sector?Credit constraints, a consequence of the widespread failure of credit markets in developing countries, are widely regarded as a key constraint to...
Working Paper
A new social contract inclusive of informal workersThis paper makes the case that current social contracts are often inadequate, irrelevant, or unjust for informal workers. It outlines three possible future scenarios: the bad old contract, an even worse contract, and a better new contract.Under the...
Working Paper
COVID-19 and informal workThis paper presents findings from two rounds (2020 and 2021) of a study on the impact of the COVID-19 crisis on informal workers in 11 cities across five regions of the world (Africa, Asia, Eastern Europe, Latin America, and North America). The study...
Working Paper
The COVID-19 crisis and the South African informal economyThis paper seeks to identify the differentiated impacts of the crisis on specific groups of informal workers. The analysis draws on official nationally representative labour force surveys collected quarterly by South Africa’s national statistical...
Blog
What does ‘promoting sustained, inclusive and sustainable economic growth’ mean for everyday life?Erica stands under a rudimentary market stall in Accra, Ghana, selling fruits — she has done this every day for 10 years now. Like many women in the...
Blog
The COVID-19 crisis, informal workers, and gender — understanding the intersections
The COVID-19 crisis — the pandemic, restrictions, and recession — has not been a grand leveler. While all of us, rich and poor, faced the fear and...
Working Paper
Recovery with distress: unpacking COVID-19 impact on livelihoods and poverty in BangladeshThe social and economic impact of COVID-19 has been deep, wide-ranging, and multi-dimensional. While anecdotal evidence of distress among the poor, particularly those with informal occupations, has been widespread, effective policy response has...
Journal Article
Finance, gender and entrepreneurshipPart of Journal Special Issue What sustains informality
Journal Article
The impact of the COVID-19 pandemic on the poorWe examine the impact of the COVID-19 pandemic on the livelihoods of the poor in a semi-rural setting in Bangladesh. We use an unusually rich dataset which tracks the economic and financial transactions of sixty poor and very poor individuals and...
Journal Article
Informal work in sub-Saharan AfricaDespite rapid economic growth in recent decades, informality remains a persistent phenomenon in the labor markets of many low- and middle-income countries. A key issue in this regard concerns the extent to which informality itself is a persistent...
Working Paper
COVID-19 in Central America: effects of firm resilience and policy responses on employmentWith data from the World Bank Enterprise Survey, this paper examines how firm-level resilience capabilities interact with government support in the reduction of lay-offs among formal firms in Central America. We estimate two latent variables to...
Working Paper
The afterlife of industrial workThe COVID-19 pandemic has escalated processes of labour transition from industrial work to the informal economy, which have always characterized the life of the working poor. Exploring urban-to-rural labour transitions through a feminist political...
Blog
Helping the poor to survive lockdownThe Hrishipara Daily Diaries Project has been tracking the daily spending of 60 poor households in rural Bangladesh for the last six years. Analysis...
Working Paper
Informal employment or informal firms? Regulatory enforcement and the transformation of the informal sectorWhile there is general agreement that regulatory avoidance is an important part of firms’ decisions to produce in the informal sector, there is much less agreement on how regulation and enforcement affect firms’ decisions on, inter alia, which sector...
Working Paper
Digital technology and productivity of informal enterprisesThe lingering policy dilemma facing many governments in sub-Saharan Africa in recent years is what can be done in the short to medium term to boost the output and incomes of individuals and enterprises in the informal sector, given the size and...
Working Paper
Informality and pension reforms in BoliviaHow social protection programmes affect work choices is a question that has been at the centre of labour economics research for decades. More recently, a scant literature has focused on the effects of social protection on work choices and informal...
Blog
Ethnic diversity and informal employment in GhanaInformal activities are widespread in many developing countries. In many sub-Saharan African (SSA) countries informal economic activities account for...
Blog
Precarious employment for youth in Egypt, Jordan, and TunisiaYouth (those aged 15–29) in the Middle East and North Africa (MENA) face notoriously precarious employment prospects. Youth unemployment is the...
Blog
Precarization or protection? How labour policies influence the effects of globalization on informalityGlobalization has generally coincided with a rise in work outside the formal economy, intensifying job precarization — when high-quality, formal jobs...
Blog
Over 2 billion workers globally are informal — what should we do about it?
Informality is a pervasive phenomenon in the labour markets of developing countries. Two billion workers, representing 61.2 per cent of the world’s...
Blog
Better measures of informality can improve poverty reduction policy
In a recent study, my co-authors and I propose a new way to measure informality by household, rather than by individual worker. We find that such an...
Working Paper
What sustains informality?We consider two vertical links between informal- and formal-sector firms and study their implications. In one case, the final products produced by the formal- and informal-sector firms are vertically differentiated in terms of quality, and the size...
Working Paper
The gendered crisis: livelihoods and mental well-being in India during COVID-19This paper studies the impact of the COVID-19 crisis on the gendered dimensions of employment and mental health among urban informal-sector workers in India. First, we find that men’s employment declined by 84 percentage points post-pandemic relative...
Blog
Ghana's lockdown hit vulnerable workers hard: What needs to happen next timeCoronavirus lockdowns brought the world to a standstill. Rules on hygiene and social distancing have reshaped daily life, schools and businesses had...
Report
How COVID-19 is affecting workers and their livelihoods in urban GhanaThis survey is a collaborative project conducted by researchers of the United Nations University World Institute for Development Economics Research (UNU-WIDER) and the Institute of Statistical, Social and Economic Research (ISSER), University of...
Working Paper
The livelihood impacts of COVID-19 in urban South AfricaThis paper investigates the impact of the COVID-19 pandemic and related policy measures on livelihoods in urban South Africa. Using qualitative research methods, we analyse two rounds of semi-structured phone interviews, conducted between June and...
Working Paper
Heterogeneous informality in Costa Rica and NicaraguaInformal work is often considered a place of employment for marginalized and vulnerable workers who have been rationed out of preferred formal work. However, informality can also be seen as a dynamic sector that budding entrepreneurs and those...
Working Paper
Precarization or protection? The impact of trade and labour policies on informalitySeveral episodes of market-oriented reforms in developing countries have been accompanied by a significant rise in work outside of the formal economy. This paper investigates whether the impact of increased exposure to trade on formal employment is...
Working Paper
The impact of the COVID-19 pandemic on the poorIn this paper, we examine the economic impact of the COVID-19 pandemic on the livelihoods of the poor. We use an unusually rich data set from a ‘financial diaries’ study known as the Hrishipara Daily Diaries Project. The data set tracks the economic...
Working Paper
The labour market impact of COVID-19 lockdownsIn this paper, we provide causal evidence of the impact of stringent lockdown policies on labour market outcomes at both the extensive and intensive margins, using Ghana as a case study. We take advantage of a specific policy setting, in which strict...
Working Paper
Welfare and the depth of informalityThis study explores the relationship between household poverty and depth of informality by proposing a new measure of informality at the household level. It is defined as the share of activities (hours worked or income earned) without social...
Journal Article
Duration of pre-university education and labour market outcomesThis study provides new evidence on the effect of shortening the duration of pre‐university education on long‐term labour market outcomes in Ghana, exploiting the education reform of 1987 as a natural experiment. Our results indicate that the drastic...
Working Paper
Job quality and labour market transitionsIn this paper we analyse informal work in Mexico, which accounts for the majority of employment in the country and has grown over time. We document that the informal sector is composed of two distinct parts: salaried informal employment and self...
Working Paper
Informality, labour transitions, and the livelihoods of workers in Latin AmericaThis paper studies the incidence and heterogeneity of labour informality in six Latin American countries—Argentina, Brazil, Ecuador, Mexico, Paraguay, and Peru. We divide workers into five work statuses: formal wage-employed, formal self-employed...
Working Paper
Scrutinizing the sticky floor/glass ceiling phenomena in the informal labour market in CameroonCameroon’s informal labour market largely harbours female workers, engaged mainly in low-productivity and low-paying jobs. We investigate the sticky floor and glass ceiling phenomena in the informal labour market as a whole and across its segments.We...
Working Paper
Informality and firm performance in MyanmarUsing a novel panel survey of enterprises in Myanmar, we compare the performance of manufacturing firms by three different informality definitions. The first is binary, based on whether firms pay taxes. The second captures five categories of...
Working Paper
Vulnerable employment of Egyptian, Jordanian, and Tunisian youthYouths in the Middle East and North Africa face the highest unemployment rates in the world. Those who are employed are pushed to accept informal sector jobs that are insecure, unsafe, and lack non-wage benefits. Precarious employment is pervasive...
Working Paper
Formalization and productivityUsing a firm-level panel dataset on private small- and medium-sized enterprises (SMEs) in Viet Nam’s manufacturing sector, this paper examines productivity dynamics of formal and informal firms. We decompose productivity changes into changes within...
Working Paper
Informality and work statusThe most important determinant of households’ livelihoods is how much they earn for their labour. People in informal work are more likely to be low earners, to live in poverty, and to make fewer transitions into the higher-paying work statuses. The...
Journal Article
How mobile are workers across informal and formal jobs in India?The Indian labour market is characterized by a high level of informality, with large numbers of workers in poorly paid ‘lower-tier’ informal jobs, and somewhat better paid ‘upper-tier’ informal jobs, which do not have the same benefits and security...
Working Paper
By choice or by force?Using a special module of the 2015 Mexican Labour Force Survey with information on workers’ preferences for jobs with social security coverage, I estimate that 80 per cent of informal workers in large urban areas would prefer to work in a job that...
Working Paper
Transforming informal work and livelihoods in ChinaThe informal sector has long been viewed as a locus of the disadvantaged, unskilled, and inexperienced workers in under-developed and developing economies. Workers in the informal sector, however, can learn skills and gain experience that could help...
Working Paper
Political connections and firm's formalizationThe literature shows that political connections have different effects on firms’ activities. However, the question of how political connections affect firms’ formalization has not been explored. Using data from three waves of the Vietnam Small and...
Working Paper
Informal–formal workers' transition in NigeriaThis study evaluates the effects of the informal sector on Nigerian workers’ livelihoods and analyses workers’ transitions within the informal sector and between informal and formal employment. A binary logit model is applied to General Household...
Working Paper
Finance, gender, and entrepreneurshipHow does informal economic activity respond to increased financial inclusion? Does it become more entrepreneurial? Does access to new financing options change the gender configuration of informal economic activity and, if so, in what ways and what...
Working Paper
Progress and stagnation in the livelihood of informal workers in an emerging economyWe use long-spanning individual longitudinal data to examine the long-term labour market outcomes of low-tier informal workers. We investigate their characteristics, calculate the extent of switching, and identify the characteristics of those who...
Working Paper
Dynamics of off-farm self-employment in West African SahelThis study uses detailed household-level data to analyse off-farm self-employment dynamics in Mali and Niger. It adds to the literature that acknowledges the existence of heterogeneities in informal work and the body of evidence on informal self...
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Theme: 2019-23, Transforming economies