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Economic Informality : Causes, Costs, and Policies - A Literature Survey

Author

Listed:
  • Ana Maria Oviedo
  • Mark R. Thomas
  • Kamer Karakurum-Ozdemir

Abstract

In this survey the author assemble recent theoretical and empirical advances in the literature on economic informality, analyzing the causes and costs of informality in developed and developing economies. In accordance with recent evidence, the author discusses the nature and the roots of informal economic activity across countries distinguishing between informality as the result of 'exclusion' and 'exit.' The author then provides an extensive review of recent international experience with policies aimed at reducing informality, in particular policies that facilitate the formalization process, create a framework for the transition from informality to formality, lend support to newly created firms, reduce or eliminate inconsistencies across regulation and government agencies, increase information flows, and increase enforcement.

Suggested Citation

  • Ana Maria Oviedo & Mark R. Thomas & Kamer Karakurum-Ozdemir, 2009. "Economic Informality : Causes, Costs, and Policies - A Literature Survey," World Bank Publications - Books, The World Bank Group, number 5917, December.
  • Handle: RePEc:wbk:wbpubs:5917
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Grishina, Elena (Гришина, Елена) & Dormidontova, Yulia (Дормидонтова, Юлия) & Lyashok, Victor (Ляшок, Виктор) & Burdyak, Alexandra (Бурдяк, Александра) & Kazakova, Yuliya (Казакова, Юлия) & Tsatsura (, 2015. "Effect of Labor and Retirement Behavior of the Population in the Long-Term Sustainability of the Pension System in the Russian Federation and the Reduction of Risks of Deprivational Poverty Among the ," Published Papers mn4, Russian Presidential Academy of National Economy and Public Administration.
    2. Lippe, Rattiya Suddeephong & Ojeda Luna, Tatiana & Katajamäki, Waltteri & Schweinle, Jörg, 2023. "Labour informality in forestry: A longitudinal (2009–2020) cross-country analysis of determinants in 70 developing countries," Forest Policy and Economics, Elsevier, vol. 156(C).
    3. Camila Cisneros-Acevedo & Alessandro Ruggieri, 2022. "Firms, policies, informality, and the labour market," Discussion Papers 2022-11, University of Nottingham, GEP.
    4. repec:grm:ecoyun:201616 is not listed on IDEAS
    5. Kose, M. Ayhan & Elgin, Ceyhun & Ohnsorge, Franziska & Yu, Shu, 2021. "Understanding Informality," CEPR Discussion Papers 16497, C.E.P.R. Discussion Papers.
    6. Diaz, Juan Jose & Chacaltana, Juan & Rigolini, Jamele & Ruiz, Claudia, 2018. "Pathways to Formalization: Going beyond the Formality Dichotomy," IZA Discussion Papers 11750, Institute of Labor Economics (IZA).
    7. Amponsah, Mary & Agbola, Frank W. & Mahmood, Amir, 2021. "The impact of informality on inclusive growth in Sub-Saharan Africa: Does financial inclusion matter?," Journal of Policy Modeling, Elsevier, vol. 43(6), pages 1259-1286.
    8. Ligita Gasparėnienė & Rita Remeikienė & Colin C. Williams, 2022. "Unemployment and the Informal Economy," SpringerBriefs in Economics, Springer, number 978-3-030-96687-4, September.
    9. Pankaj C. Patel & Cornelius A. Rietveld, 2023. "Right of association and new business entry: country-level evidence from the market sector," Small Business Economics, Springer, vol. 61(3), pages 1161-1177, October.
    10. Lahlou, Kamal & Doghmi, Hicham & Schneider, Friedrich, 2020. "The Size and Development of the Shadow Economy in Morocco," Document de travail 2020-3, Bank Al-Maghrib, Département de la Recherche.
    11. Carrington, Sarah J. & Herrero Olarte, Susana & Urbina, Gabriel, 2023. "Commodity cycle management in Latin America: The importance of resilience in face of vulnerability," Resources Policy, Elsevier, vol. 81(C).
    12. John Bennett & Matthew D. Rablen, 2015. "Self-employment, wage employment, and informality in a developing economy," Oxford Economic Papers, Oxford University Press, vol. 67(2), pages 227-244.
    13. Hazans, Mihails, 2011. "What explains prevalence of informal employment in European countries : the role of labor institutions, governance, immigrants, and growth," Policy Research Working Paper Series 5917, The World Bank.
    14. Mendi, Pedro & Mudida, Robert, 2018. "The effect on innovation of beginning informal: Empirical evidence from Kenya," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 326-335.
    15. Alan Finkelstein Shapiro, 2015. "Institutions, Informal Labor Markets, and Business Cycle Volatility," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2015), pages 77-112, October.
    16. Kamila Fialová, 2010. "Labor Institutions and their Impact on Shadow Economies in Europe," Working Papers IES 2010/29, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Dec 2010.
    17. Colin C. Williams, 2014. "Confronting the Shadow Economy," Books, Edward Elgar Publishing, number 15370.
    18. Colin C. Williams & Youssef Youssef, 2014. "Classifying Latin American Economies: A Degree of Informalisation Approach," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 5(3), pages 73-85, May.
    19. Nejat Anbarci & Pedro Gomis-Porqueras & Marcus Pivato, 2018. "Evolutionary stability of bargaining and price posting: implications for formal and informal activities," Journal of Evolutionary Economics, Springer, vol. 28(2), pages 365-397, April.
    20. Colin C. Williams & Friedrich Schneider, 2016. "Measuring the Global Shadow Economy," Books, Edward Elgar Publishing, number 16551.
    21. World Bank Group, 2018. "Romania Financial Sector Assessment Program," World Bank Publications - Reports 30220, The World Bank Group.
    22. Kamila Fialová & Ondrej Schneider, 2014. "Labor Market Institutions and Their Impact on Shadow Economies in Europe," Review of Economics and Institutions, Università di Perugia, vol. 5(1).
    23. Dennis Nchor, 2021. "Shadow economies and tax evasion: The case of the Czech Republic, Poland and Hungary," Society and Economy, Akadémiai Kiadó, Hungary, vol. 43(1), pages 21-37, March.
    24. Nong Zhu & Cecile Batisse, 2015. "Activité indépendante, inégalité et pauvreté des immigrants au Canada," CIRANO Working Papers 2015s-31, CIRANO.
    25. Gheorghe H. Popescu & Adriana Ana Maria Davidescu & Catalin Huidumac, 2018. "Researching the Main Causes of the Romanian Shadow Economy at the Micro and Macro Levels: Implications for Sustainable Development," Sustainability, MDPI, vol. 10(10), pages 1-37, September.

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