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The Informal Sector in Developing Countries: Output, Assets and Employment

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  • Sangeeta Pratap
  • Erwan Quintin

Abstract

This study documents four key facts about informal economic activities: (1) the size of the informal sector varies greatly across nations; (2) this size is strongly correlated with economic development, the tax burden, and the rule of law; (3) the informal sector emphasizes small-scale, self-financed and unskilled labour intensive economic activities; and (4), while financial markets are generally segmented along formal/informal lines in developing nations there is no compelling evidence that this is true for labour markets.

Suggested Citation

  • Sangeeta Pratap & Erwan Quintin, 2006. "The Informal Sector in Developing Countries: Output, Assets and Employment," WIDER Working Paper Series RP2006-130, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:rp2006-130
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