Working Paper: CEPR ID: DP10509
Authors: Ravi Kanbur
Abstract: A stylized prediction of the development economics discourse is that informality will disappear with development. And yet in the last twenty years conventional measures of informality, far from declining, have either remained stagnant or have actually increased. What exactly is informality and what are its magnitudes and trends? What are the causes of informality and why is it not decreasing as predicted by standard theories of development? What are the consequences for inclusive economic growth of a large and increasing informal sector? What are feasible and desirable policy responses to informality? These are the questions which motivate this broad based survey and overview of informality, with particular focus on India.
Keywords: informal labour; informal sector; informality; informality and poverty
JEL Codes: J46; O17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regulatory burden (L51) | informality (J46) |
| economic conditions (E66) | informality (J46) |
| higher wages (J39) | informality (J46) |
| lower optimal enterprise sizes (L25) | informality (J46) |
| informality (J46) | poverty (I32) |
| poverty (I32) | informality (J46) |
| regulatory environment (G38) | informality (J46) |
| looser enforcement (K40) | informality (J46) |
| tighter enforcement (K40) | informality (J46) |
| informality (J46) | productivity (O49) |
| informality (J46) | economic growth (O49) |