The "informal" economy - economic activity and income outside government
regulation, taxation, and observation - is, by its very nature,
difficult to quantify. Recent estimates suggest it accounts, in OECD
countries, for around 13% of national income and in developing nations
it can make up as much as three-quarters of all non-agricultural
employment. Whatever the exact figures, it is clear that the informal
economy plays a significant role in national incomes (even though
excluded from calculations of GDP) and affects a large share of the
global workforce.
Colin C. Williams provides an authoritative introduction to the topic,
explaining what the informal economy is (and what it isn't) and how it
can best be measured. Taking a global perspective, he examines its
characteristics in developed, developing, and transitional economies and
looks at its role as a driver of economic growth. The theoretical
underpinnings are explored, from conceptual origins in the development
models of the 1950s through to present-day discussions, which question
whether a formalized economy is always the ideal.
The book considers the economic motivations of the informal economy
workforce and assesses the different policy options available to
governments to combat them, whether a punitive policy of deterrence or
one of accommodation that recognizes the value of the sector in
generating income and in meeting the needs of poor consumers.
The book provides a masterly summation of the published research on the
informal economy and an expert assessment of the key areas for research
going forward. It will be welcomed by students taking courses in
development economics, economic growth, labor economics, welfare
economics, and public policy.
