Juridical and Functional Informality: From Theory to Practical Policy

William Gibson and Diane Flaherty
Additional contact information
Diane Flaherty: Diane Flaherty is Professor of Economics at University of Massachusetts, Amherst, USA, email: dpflaherty@gmail.com

Margin: The Journal of Applied Economic Research, 2016, vol. 10, issue 4, 409-445

Abstract: The purpose of this article is to deepen the understanding of informality, and related efforts governments must take to cope with large and persistent informal sectors. Is the informal sector a source of growth and employment or a drain on the fiscus that undermines social safety nets? This article questions the ‘formal sector bias’ present in much of the policy discussions surrounding informality. A theoretically grounded distinction between ‘functional’ and ‘juridical’ informality is drawn and applied to subcontracting as an illustrative case. The broad conclusion of the paper is not supportive of public intervention to formalise the informal sector but rather suggests that tolerating the informal sector might well improve economic performance as measured by output and employment. JEL Classification: O17, E17

Keywords: Informal sector; Employment (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0973801016659729 (text/html)

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:sae:mareco:v:10:y:2016:i:4:p:409-445

DOI: 10.1177/0973801016659729

Access Statistics for this article

More articles in Margin: The Journal of Applied Economic Research from National Council of Applied Economic Research
Bibliographic data for series maintained by SAGE Publications ().