Second Best? Trends and Linkages in the Informal Economy in South Africa

Richard Devey, Caroline Skinner and Imraan Valodia ()
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Imraan Valodia: School of Development Studies, University of KwaZulu-Natal

Working Papers from University of Cape Town, Development Policy Research Unit

Abstract: The idea of a ‘second economy’ has become a feature of recent government economic policy. In this paper we focus on one important element of the second economy – the informal economy. We analyse the nature of the informal economy in South Africa, providing some descriptive statistics and analysis to highlight the nature and extent of the informal economy. Given the present prominence of the ‘second economy’ concept, we provide some analysis of the efficacy of current government support measures to the informal economy, concluding that these are few and far between, patchy and incoherent, and largely ineffective. We then examine linkages between employment in the formal and the informal economy arguing that, contrary to the views of the President and the ANC, there are in fact fairly close linkages between the formal economy and the informal economy. Finally, by way of conclusion, we use the evidence provided in the paper to comment on the accuracy and relevance of the ‘second economy’ concept.

Keywords: South Africa: 'second economy'; informal economy; formal economy (search for similar items in EconPapers)
JEL-codes: A1 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2006-02
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Citations: View citations in EconPapers (7)

Published in Working Paper Series by the Development Policy Research Unit, February 2006, pages 1-27

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http://hdl.handle.net/11427/7359 First version, 2006 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ctw:wpaper:06102

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