Informal Employment

Informal employment, often associated with the “shadow economy,” is employment that escapes taxation and regulation. There are varied descriptions of the phenomenon and the problems associated with its measurement in society. Understanding the drivers behind the prevalence of informal employment in society is important because it has wide-ranging impacts on society, from reduced social protection for individuals, which has implications for inequality and poverty, to the growth of the economy and loss of tax revenue. The informal sector is a pervasive and persistent economic feature of most developing economies, contributing significantly to employment creation, production, and income generation, but it also retains a presence in many developed countries.

Some theorists, such as Julius Boeke, have suggested that a “dual economy” exists, where two forms of employment ...