Regulation, enforcement and informality: an analysis based on selected countries

Punarjit Roychowdhury and Mousumi Dutta

MPRA Paper from University Library of Munich, Germany

Abstract: The informal economy has been occupying a key position in the development-discourse ever since it was ‘discovered’ in the Ghana in the second half of the 20th century. A good deal of literature has grown up in the past forty years with efforts to ‘formalize’ the concept of informality and to integrate it with mainstream development economic theory. In particular, there is a strong controversy regarding the appropriate policy response to informality: Should it be left on its own or should the state intervene in the functioning of the informal sector? And, if the state needs to regulate the informal sector, what instruments of regulation can it possibly put to use? Based on the literature that has developed around these issues, the paper provides a formal econometric model of regulation and enforcement. Using secondary data collected for 46 countries from different sub-continents over the period between 1980 and 2008, this study explores the inter-relationship among regulation, enforcement and the level of informal employment for different countries across the world. The study establishes that regulation by itself has no role in reducing or aggravating the level of informality in an economy. Regulation will only affect levels of informality when it is enforced.

Keywords: Informal sector; Regulations; Panel data (search for similar items in EconPapers)
JEL-codes: C33 L51 (search for similar items in EconPapers)
Date: 2011-05-09
New Economics Papers: this item is included in nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/30818/1/MPRA_paper_30818.pdf original version (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:pra:mprapa:30818

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().