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Integrating Theories on Informal Economies: An Examination of Causes of Urban Informal Economies in China

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  • Gengzhi Huang

    (School of Geography and Planning, Sun Yat-Sen University, Guangzhou 501275, China
    Southern Marine Science and Engineering Guangdong Laboratory, Zhuhai 519082, China
    Guangzhou Institute of Geography, Guangdong Academy of Sciences, Guangzhou 510070, China)

  • Desheng Xue

    (School of Geography and Planning, Sun Yat-Sen University, Guangzhou 501275, China
    Southern Marine Science and Engineering Guangdong Laboratory, Zhuhai 519082, China)

  • Bo Wang

    (School of Geography and Planning, Sun Yat-Sen University, Guangzhou 501275, China
    Southern Marine Science and Engineering Guangdong Laboratory, Zhuhai 519082, China)

Abstract

Rapid urbanization has seen a concurrent growth of informal economies, which play an important role in alleviating urban unemployment and poverty. Following international efforts to integrate divergent theories on informality, this paper examines the causes of urban informal economies in China by deploying a panel data regression model that considers multiple explanatory factors informed by these theories. Our estimation based on the latest China Population Census shows that the size of urban informal employment in China reached 215 million and 22% of gross domestic product (GDP) output share was from urban informal economies. Our model reveals that the causes of urban informal economies in China are mainly associated with the stages of economic development, tertiarization of industries, unemployment, rural-to-urban migration, and globalization of urban economies. This paper adds evidence from the Chinese context to the emerging argument that informal economies cannot be fully explained by each mainstream informality theory, suggesting that these theories should be seen as complementary rather than opposing alternatives. The paper concludes with policy implications for urbanization in China.

Suggested Citation

  • Gengzhi Huang & Desheng Xue & Bo Wang, 2020. "Integrating Theories on Informal Economies: An Examination of Causes of Urban Informal Economies in China," Sustainability, MDPI, vol. 12(7), pages 1-16, March.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:7:p:2738-:d:339469
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    Cited by:

    1. Yingmin Huang & Desheng Xue & Gengzhi Huang, 2021. "Economic Development, Informal Land-Use Practices and Institutional Change in Dongguan, China," Sustainability, MDPI, vol. 13(4), pages 1-18, February.
    2. Canh Phuc Nguyen & Binh Nguyen Quang & Thanh Dinh Su, 2023. "Institutional frameworks and the shadow economy: new evidence of colonial history, socialist history, religion, and legal systems," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(3), pages 647-675, September.
    3. Ligita Gasparėnienė & Rita Remeikienė & Colin C. Williams, 2022. "Unemployment and the Informal Economy," SpringerBriefs in Economics, Springer, number 978-3-030-96687-4, October.
    4. Ligita Gasparėnienė & Rita Remeikienė & Colin C. Williams, 2022. "Theorizing the Informal Economy," SpringerBriefs in Economics, in: Unemployment and the Informal Economy, chapter 0, pages 7-60, Springer.
    5. Walid Merouani & Claire El Moudden & Nacer Eddine Hammouda, 2021. "Social Security Enrollment as an Indicator of State Fragility and Legitimacy: A Field Experiment in Maghreb Countries," Social Sciences, MDPI, vol. 10(7), pages 1-25, July.
    6. Gengzhi Huang & Yanshan Yang & Yubing Lei & Jiangmin Yang, 2022. "Differences in Subjective Well-Being between Formal and Informal Workers in Urban China," IJERPH, MDPI, vol. 20(1), pages 1-15, December.
    7. Estevão, João & Lopes, José Dias & Penela, Daniela, 2022. "The importance of the business environment for the informal economy: Evidence from the Doing Business ranking," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    8. Guangyan Chen & Feng Qiu & Xiaowen Dai & Hongxing Lan & Jiahao Song, 2022. "Research on the Influence of Informal Employment on Residents’ Happiness in China: Empirical Analysis Based on CLDS Data," IJERPH, MDPI, vol. 19(15), pages 1-14, July.
    9. Anzhelika Viktorovna Karpushkina & Irina Valentinovna Danilova & Svetlana Vladimirovna Voronina & Irina Petrovna Savelieva, 2021. "Assessing the Impact of Employment in the Informal Sector of the Economy on Labor Market Development," Sustainability, MDPI, vol. 13(15), pages 1-15, July.

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