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Tackling employment in the informal economy: A critical evaluation of the neoliberal policy approach

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  • Colin C Williams

Abstract

This article evaluates critically the neoliberal perspective that employment in the informal economy is a product of high taxes, public sector corruption and state interference in the free market and that reducing taxes, corruption and the regulatory burden via minimal state intervention is the remedy. Analysing the varying size of the informal economy across 36 developing and transition countries, little or no association is found with higher tax rates, greater levels of corruption and state interference. Instead, employment in the informal economy appears to reduce with higher levels of regulation and state intervention. The theoretical and policy implications are discussed.

Suggested Citation

  • Colin C Williams, 2017. "Tackling employment in the informal economy: A critical evaluation of the neoliberal policy approach," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 38(1), pages 145-169, February.
    • Handle: RePEc:sae:ecoind:v:38:y:2017:i:1:p:145-169
    DOI: 10.1177/0143831X14557961
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    References listed on IDEAS

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    1. repec:bla:germec:v:11:y:2010:i::p:109-149 is not listed on IDEAS
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    5. Colin C. Williams & Sara J. Nadin, 2012. "Tackling entrepreneurship in the informal economy: evaluating the policy options," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 1(2), pages 111-124, October.
    6. Colin C. Williams & Sara J. Nadin, 2012. "Tackling entrepreneurship in the informal economy: evaluating the policy options," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 1(2), pages 111-124, October.
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    8. Colin C Williams, 2014. "Out of the shadows: a classification of economies by the size and character of their informal sector," Work, Employment & Society, British Sociological Association, vol. 28(5), pages 735-753, October.
    9. Packard, Truman G., 2007. "Do workers in Chile choose informal employment? A dynamic analysis of sector choice," Policy Research Working Paper Series 4232, The World Bank.
    10. Peck, Jamie, 2012. "Constructions of Neoliberal Reason," OUP Catalogue, Oxford University Press, number 9780199662081.
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    14. Colin C. Williams, 2013. "Evaluating cross-national variations in the extent and nature of informal employment in the European Union," Industrial Relations Journal, Wiley Blackwell, vol. 44(5-6), pages 479-494, November.
    15. Colin Williams & Sara J. Nadin, 2014. "Facilitating the formalisation of entrepreneurs in the informal economy," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 3(1), pages 33-48, April.
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    Cited by:

    1. Alicja Bobek & James Wickham, 2018. "Blurring boundaries: informal practices in formal employment in Ireland," Industrial Relations Journal, Wiley Blackwell, vol. 49(4), pages 336-351, July.
    2. Andrea Fracasso & Giuseppe Vittucci Marzetti & Diego Coletto, 2018. "Informal economy and extractive institutions," Review of Economics and Institutions, Università di Perugia, vol. 9(1).
    3. Robert G Blanton & Dursun Peksen, 2025. "Peacekeeping operations and shadow economy growth in host countries," Conflict Management and Peace Science, Peace Science Society (International), vol. 42(2), pages 148-167, March.

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