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Informality: Causes, Consequences and Policy Responses

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  • Kanbur, Ravi

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.

Suggested Citation

  • Kanbur, Ravi, 2015. "Informality: Causes, Consequences and Policy Responses," CEPR Discussion Papers 10509, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10509
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    Keywords

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    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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