Informality: Issue 2

Most low- and middle-income countries are characterised by a large informal sector, which implies that a substantial fraction of economic activity and livelihoods in these countries goes on completely unregulated. This has important implications for the behaviour of firms, workers, families, and consumers, which combine to have important effects on aggregate outcomes such as productivity, output, growth, and overall economic wellbeing. This VoxDevLit summarises a wide range of studies from well-identified empirical analyses to macro and structural equilibrium models of informality. The final goal is to provide an accessible, integrated understanding of the causes and consequences of informality for economic development.