Growth, economic structure and informality

Chacaltana Janampa, Juan,, Florence. Bonnet and Juan Manuel Garcia Carpio

ILO Working Papers from International Labour Organization

Abstract: This paper explores the relationship between economic growth and informality and highlights the role of GDP growth and its composition in the level and evolution of informality, using country data from 1991 to 2019. The analysis reveals a weak relationship, although with important differences across regions and income levels. Coefficients are higher in middle-income countries. This means that the same growth rate generates different impacts on informality depending on the country, probably due to pre-existing levels of informality, the economic structure or institutional and other variables. Economic structure appears to be the key determinant of informality, even after controlling for endogeneity, using different proxies of informality or including institutional variables. These results confirm that the economic structure and pattern of growth matters for formalization. This calls for policies that promote changes in the productive structure, including a broader, more diversified base and more economic complexity and technological sophistication, to ensure inclusive growth.

Keywords: economic growth; informal economy; gross domestic product; economic structure (search for similar items in EconPapers)
Pages: 1 online resource (54 p.) pages
Date: 2022
New Economics Papers: this item is included in nep-gro and nep-iue
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published in ILO working paper series

Downloads: (external link)
https://doi.org/10.54394/UQOF2851 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ilo:ilowps:995186987602676

Access Statistics for this paper

More papers in ILO Working Papers from International Labour Organization Contact information at EDIRC.
Bibliographic data for series maintained by Vesa Sivunen (labordoc@ilo.org).