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Informality: Causes, consequences and policy responses

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  • 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.
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Suggested Citation

  • Ravi Kanbur, 2017. "Informality: Causes, consequences and policy responses," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 939-961, November.
    • Handle: RePEc:bla:rdevec:v:21:y:2017:i:4:p:939-961
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    File URL: http://hdl.handle.net/10.1111/rode.12321
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    References listed on IDEAS

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    1. Ravi Kanbur & Michael Keen, 2014. "Thresholds, informality, and partitions of compliance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(4), pages 536-559, August.
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    More about this item

    JEL classification:

    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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