Axel Dreher, Professor of International and Development Politics, Heidelberg University, Germany The questions raised in this book, and the answers given, make it essential reading for academics and policy makers alike.” Franziska Ohnsorge and Shu Yu have edited an authoritative source of reference for everyone interested in the informal economy. Its analysis of informality’s most important correlates provides important insights and policy implications, written in highly accessible prose. “This highly informative and timely book compiles various measures of the informal economy in a comprehensive global dataset. Brahima Sangafowa Coulibaly, Vice President, Global Economy and Development, The Brookings Institution The resulting policy recommendations offer compelling pathways for policy makers looking to address some of the main obstacles to formalization of the economies and accelerate economic development in the post-pandemic world.” This timely book provides an invaluable knowledge resource for researchers and practitioners alike through an approach that balances rigorous quantitative and qualitative methods. The authors construct a novel and comprehensive dataset on informality, which allows them to unpack the complexity of the informal sector and its interaction with the formal sector. “Significant data gaps have previously limited our ability to thoroughly study the informal economy until now. Sergei Guriev, Professor of Economics, Sciences Po, and Former Chief Economist, European Bank for Reconstruction and Development
A rigorous, relevant and highly timely must-read for development scholars and policy makers.” Informal economic activity is concentrated in labor-intensive service sectors and thus is especially vulnerable to social distancing and lockdowns. The book also produces the first analysis of the role of informality during the COVID pandemic. Contrary to the widespread stereotype that the informal sector is a buffer that helps to mitigate recessions in the formal sector, the informal sector's output moves in sync with the formal one, and informal employment does not increase during recessions. In particular, it explores the business cycles in the informal sector in 160 countries over the last 30 years the study is the first one to show that cycles in the formal economy cause those in the informal economy.
This excellent book uses state-of-the-art methodologies and recently available data to measure and analyze informality in advanced economies and emerging market and developing economies.
“By definition, the informal economy is hard to study, especially in developing countries.
It finds that pervasive informality is associated with significantly weaker economic outcomes-including lower government resources to combat recessions, lower per capita incomes, greater poverty, less financial development, and weaker investment and productivity. This study is the first comprehensive analysis of the extent of informality and its implications for a durable economic recovery and for long-term development. This may hold back the recovery in these economies from the deep recessions caused by the COVID-19 pandemic-unless governments adopt a broad set of policies to address the challenges of widespread informality. A large percentage of workers and firms operate in the informal economy, outside the line of sight of governments in emerging market and developing economies.