New York City's Informal Economy

A central question for theory and policy is whether the formation and expansion of informal sectors in advanced industrialized countries is the result of conditions created by advanced capitalism. Rather than assume that Third World immigration is causing informalization, we need a critical examination of the role it may or may not play in this process. Immigrants, in so far as they tend to form communities, may be in a favorable position to seize the opportunities represented by informalization. But the opportunities are not necessarily created by immigrants. They may well be a structured outcome of current trends in the advanced industrialized economies. Similarly, what are perceived as backward sectors of the economy may or may not be remnants from an earlier phase of industrialization; they may well represent a downgrading of work involving growing sectors of the economy. This type of inquiry requires an analytical differentiation of immigration, informalization and characteristics of the current phase of advanced industrialized economies. That should allow us to establish the differential impact of (a) immigration and (b) conditions in the economy at large on the formation and expansion of informal sectors. The research on the informal sector in New York City seeks to contribute information on these various questions. The working hypothesis is that the current phase of the advanced industrialization contains conditions that induce the formation of an informal sector in large cities. There are two distinct methodological components to the study. One is concerned with identifying conditions in the major growth sectors that may induce informalization. This analysis has been completed (Sassen-Koob 1981; 1984a). The other is concerned with identifying the characteristics of the informal sector itself. This paper reports on this part of the study and the findings for New York.