Understanding Informality

Ayhan Kose, Ceyhun Elgin, Franziska Ohnsorge and Shu Yu

No 16497, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper introduces a comprehensive database of informal economic activity. The database focuses on measures that have strong cross-country and over time coverage: it includes both model-based and survey-based measures of informality and covers more than 160 economies for the period 1990-2018. The paper illustrates two applications of the database. First, it distills stylized facts of informal activity, including its declining trend and pervasiveness in emerging market and developing economies (EMDEs). Second, it documents the cyclical features of the informal economy. Overall, informal economy recessions (recoveries) do not differ significantly from those of formal economy. Like formal-economy business cycles, informal-economy business cycles tend to be shallower in advanced economies than in EMDEs. Informal employment in both advanced economies and EMDEs appears to be largely acyclical.

Keywords: Informal economy; Self-employment; Employment; Output; Business cycles (search for similar items in EconPapers)
JEL-codes: E26 E32 J46 O17 (search for similar items in EconPapers)
Date: 2021-08
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Related works:
Working Paper: Understanding informality (2021)
Working Paper: Understanding Informality (2021)
Working Paper: Understanding Informality (2021)
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