Informal Economy

Informal economy—also referred to as the “unorganized,” “unprotected,” or “unregistered” sector—is a process of income generation that is unregulated by the political institutions of a society, in a legal and social environment in which similar activities are regulated.

The absence of institutional regulation in the informal economy affects various elements of the work process. First, it influences the status of labor, which may be undocumented, working below minimum wage, lacking social benefits, or employed under circumstances that legal or societal norms would not other otherwise allow. Second, it influences the conditions of work under which labor is employed, which may involve ignoring health, hygiene, and other safety requirements. Third, it refers to a particular form of institutional management. For instance, a company may engage in systematic ...