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Modernizing the informal sector

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  • Victor E. Tokman

Abstract

The multiplicity of policies proposed to support the informal sector reflects the lack of a common definition. Although they may produce positive effects, these are limited and fail to constitute a comprehensive strategic approach. The different interpretations in the absence of a common definition as well as the strategies emerging from them are reviewed. The identification of informality with illegality and labour precariousness, although conceptually related, is often misleading. Lastly, it explores a strategic option to regulate the informal sector, tracing the different approaches to formalizing informal activities, to facilitate their full integration into the modernization process.

Suggested Citation

  • Victor E. Tokman, 2007. "Modernizing the informal sector," Working Papers 42, United Nations, Department of Economics and Social Affairs.
    • Handle: RePEc:une:wpaper:42
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    File URL: http://www.un.org/esa/desa/papers/2007/wp42_2007.pdf
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    1. Tokman, Victor E., 1978. "An exploration into the nature of informal--formal sector relationships," World Development, Elsevier, vol. 6(9-10), pages 1065-1075.
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    Cited by:

    1. Gutiérrez-Romero, Roxana, 2021. "Inequality, persistence of the informal economy, and club convergence," World Development, Elsevier, vol. 139(C).
    2. Antonio Andres & Carlyn Ramlogan-Dobson, 2011. "Is Corruption Really Bad for Inequality? Evidence from Latin America," Journal of Development Studies, Taylor & Francis Journals, vol. 47(7), pages 959-976.
    3. David N Margolis, 2014. "By Choice and by Necessity: Entrepreneurship and Self-Employment in the Developing World," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(4), pages 419-436, September.
    4. Hussain M. Al Obaid, 2020. "Examining the motivation factors for individuals choosing self-employment: An assessment on Saudi labor market," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(5), pages 150-159, September.
    5. Maksimov, Vladislav & Wang, Stephanie Lu & Luo, Yadong, 2017. "Reducing poverty in the least developed countries: The role of small and medium enterprises," Journal of World Business, Elsevier, vol. 52(2), pages 244-257.
    6. Meheri Tamanna & Md. Kamrul Hasan, 2015. "Life in a Megacity: Livelihood Strategies and Survival Mechanisms of Rickshaw Pullers in Dhaka City," Millennial Asia, , vol. 6(1), pages 44-60, April.
    7. Gindling, T.H. & Newhouse, David, 2014. "Self-Employment in the Developing World," World Development, Elsevier, vol. 56(C), pages 313-331.
    8. Durdana Qaiser Gillani & Toseef Azid, 2017. "The informal Employment in Southern Punjab: An Empirical Evidence," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 6(3), pages 141-147, September.
    9. Sahoo, Bimal & Neog, Bhaskar Jyoti, 2015. "Heterogeneity and participation in Informal employment among non-cultivator workers in India," MPRA Paper 68136, University Library of Munich, Germany.
    10. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Who are the microenterprise owners ? Evidence from Sri Lanka on Tokman v. de Soto," Policy Research Working Paper Series 4635, The World Bank.
    11. Lahiri, Bidisha & Daramola, Richard, 2023. "Effects of credit and labor constraints on microenterprises and the unintended impact of changes in household endowments: Use of threshold estimation to detect heterogeneity," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 21-38.
    12. Bill Gibson & Diane Flaherty, 2016. "Juridical and Functional Informality: From Theory to Practical Policy," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 10(4), pages 409-445, November.
    13. Stephen J. Anderson & Rajesh Chandy & Bilal Zia, 2018. "Pathways to Profits: The Impact of Marketing vs. Finance Skills on Business Performance," Management Science, INFORMS, vol. 64(12), pages 5559-5583, December.
    14. Norbert Fiess & Marco Fugazza, 2008. "Trade Liberalisation and Informality: New stylized facts," Working Papers 2008_34, Business School - Economics, University of Glasgow.
    15. Bolanle Wahab & Babatunde Agbola, 2017. "The place of informality and illegality in planning education in Nigeria," Planning Practice & Research, Taylor & Francis Journals, vol. 32(2), pages 212-225, March.
    16. Dumenu, William Kwadwo & Appiah, Louis Gyekye & Paul, Carola & Darr, Dietrich, 2023. "Should forest enterprises formalize? Insight from a multi-dimensional characterization of informal baobab enterprises," Forest Policy and Economics, Elsevier, vol. 150(C).
    17. Norbert Fiess & Marco Fugazza, 2012. "Informality and Openness to Trade: Insights from Cross-sectional and Panel Analyses," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 6(2), pages 235-275, May.
    18. Suresh de Mel & David McKenzie & Christopher Woodruff, 2010. "Who are the Microenterprise Owners? Evidence from Sri Lanka on Tokman versus De Soto," NBER Chapters, in: International Differences in Entrepreneurship, pages 63-87, National Bureau of Economic Research, Inc.
    19. Bimal Kishore Sahoo & Bhaskar Jyoti Neog, 2017. "Heterogeneity and participation in informal employment among non-cultivator workers in India," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(4), pages 437-467, July.

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    More about this item

    Keywords

    informal sector; regulation and informality;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • D39 - Microeconomics - - Distribution - - - Other

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