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Informalization, Economic Growth and the Challenge of Creating Viable Labor Standards in Developing Countries

  • Robert Pollin
  • James Heintz
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    Over recent decades, there has been the substantial rise in the proportion of people engaged in what is termed informal employment, generating a broad trend toward “informalization” of labor market conditions in developing countries, even when economic growth is proceeding. We consider the relationship between the rise of informalization and the corresponding ascendancy of neoliberal policies in developing countries, focusing in particular on how the decline in average per capita GDP growth associated with neoliberalism has fostered informalization. We then explore policy measures for raising the proportion of decent jobs with core social protections in developing countries—which means, as we argue, reversing the process of informalization. We examine policy measures in two areas: raising the rate of economic growth and improving the regulation of labor markets.

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    Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp60.

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    Date of creation: 2003
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    Handle: RePEc:uma:periwp:wp60
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    1. Sarte, Pierre-Daniel G., 2000. "Informality and rent-seeking bureaucracies in a model of long-run growth," Journal of Monetary Economics, Elsevier, vol. 46(1), pages 173-197, August.
    2. Manik L. Shrestha & Adriaan M. Bloem, 2000. "Comprehensive Measures of GDP and the Unrecorded Economy," IMF Working Papers 00/204, International Monetary Fund.
    3. Zeba A. sathar & Shahnaz Kazi, 1989. "Female Employment and Fertility: Further Investigation of an Ambivalent Association," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 28(3), pages 175-194.
    4. Marilyn Carr & Martha Alter Chen & Jane Tate, 2000. "Globalization and Home-Based Workers," Feminist Economics, Taylor & Francis Journals, vol. 6(3), pages 123-142.
    5. Loayza, Norman A., 1997. "The economics of the informal sector : a simple model and some empirical evidence from Latin America," Policy Research Working Paper Series 1727, The World Bank.
    6. Gerald Epstein, 2002. "Employment-Oriented Central Bank Policy in an Integrated World Economy: A Reform Proposal for South Africa," Working Papers wp39, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. Tokman, Victor E., 1989. "Policies for a heterogeneous informal sector in Latin America," World Development, Elsevier, vol. 17(7), pages 1067-1076, July.
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