Description
Book SynopsisInformality is a widespread and persistent phenomenon that affects how fast economies can grow, develop, and provide decent economic opportunities for their populations. It can arise for a variety reasons and can span across borders and influence a wide range of situations. The COVID-19 pandemic has helped to uncover the vulnerabilities of the informal workforce.
This book takes a fresh look at shadow economies around the world and their overall impact on the macroeconomy. It compiles recent research by IMF staff and academics and aims to shed new light on the topic. The contributions look at the evolution of the informal economy over time, analyze its drivers and economic consequences, and discuss possible policy responses. The book covers interactions between the informal economy, labor and product markets, gender equality, fiscal institutions and outcomes, social protection, and financial inclusion.
There is no one solution to this issue, but the findings presented in the book provide some guidance for policy development. The following areas will affect the development of polices to combat the causes of informality: access to and quality of education; tax system design; promoting access to formal financial services and measures to increase financial inclusion; and supporting polices that increase incentives and eliminate excessive regulations that act as impediment to entering into formal systems.
Trade ReviewThe informal economy dominates employment and economic activity in many developing countries yet is often seen as a problem rather than a symptom of broader economic, social and institutional factors. This collection of research takes an in-depth look into understanding the causes and effects of informality and provides an inclusive framework for integration into the formal sector over time without compromising development objectives."" — Masood Ahmed, President, Center for Global Development
""Either we use the Covid-19 crisis to tackle informality head on or developing countries will face substantial social and economic turmoil in the years ahead. A window of opportunity has opened up to rethink labor markets, taxation, social protection, education and productivity to reduce informality. This pivotal book arrives right in time, with key insights for both policymakers and researchers on how to deal with these important issues."" — Alejandro Izquierdo, Deputy Director, Research Department, Inter-American Development Bank
""I am very excited about this volume, especially due to its broad but in-depth coverage of areas and policy issues that seem to crowd our policy direction as well as an understanding of the structure of the economies and markets. Understanding the informal economy and the informal markets would provide the key to the appropriate policy and administrative interventions to support this segment of the economy and markets."" — Njuguna Ndung'u, Executive Director, African Economic Research Consortium, former Governor of the Central Bank of Kenya
Table of Contents
- Introduction: What Do We Know About the Informal Economy? — Corinne Deléchat and Leandro Medina
- The Evolution of Shadow Economies through the 21st Century — Leandro Medina and Friedrich Schneider
- Europe's Shadow Economies: Estimating Size and Outlining Policy Options — Ben Kelmanson, Koralai Kirabaeva, and Leandro Medina
- Nonlinearity between the Shadow Economy and Economic Development — Dong Frank Wu and Friedrich Schneider
- The Effect of Regulatory Policy on Firm Growth in Sub-Saharan Africa — Manabu Nose
- Informality and Labor Market Dynamics in Latin America — Antonio C. David, Frederic Lambert, and Frederik Toscani
- Immigration and Employment: Substitute versus Complementary Labor in Selected African Countries — Arina Viseth
- The Close Relationship between Informality and Gender Gaps in Sub-Saharan Africa — Vivian Malta, Lisa Kolovich, Angelica Martínez Leyva, Marina M. Tavares
- Informal Economy and Institutions — Hilary Devine
- National and Subnational Tax Reforms to Address Informality — Ehtisham Ahmad
- Beyond the COVID-19 Crisis: A Framework for Sustainable Government-to-Person Mobile Money Transfers — Sonja Davidovic, Soheib Nunhuck, Delphine Prady, and Herve Tourpe
- Macroprudential Policies and Financial Inclusion: Good Intentions and Unintended Consequences — Corinne Deléchat, Lama Kiyasseh, Margaux MacDonald, and Rui Xu
- Financial Inclusion, Bank Competition, and Informal Employment in Sub-Saharan Africa — Azanaw Mengistu and Hector Perez-Saiz
