Reforms, Growth and Informal Employment. Policy Brief

The purpose of this paper is the discussion of a policy proposal oriented towards both accelerating the creation of formal protected employment and improving productivity, incomes and labor protection of urban and rural informal employment in Peru. The paper includes, besides the Introduction, Section 2 where it is presented the behavior of the informal sectors in Peru during the economic growth acceleration period. Section 3 analyses the empirical evidence in Morales, Rodríguez, Higa y Montes (2010), Rodríguez e Higa (2010) and Díaz, Saldaña y Trivelli (2010), focusing on the effect of the economic reforms on the rate of informality in Peru. Section 4 introduces the subject of labor reforms and informality. Section 5 suggests some of the policies that could contribute towards accelerating formal employment growth. Section 6 points out some of the policy options for increasing productivity and living standards within the urban informal sector. Section 7 does the same for the segment of very small scale traditional agricultural producers. Finally section 8 summarizes the main conclusions. This document was published in 2011, thanks to the sponsorship of the International Development Research Center (IDRC).