Informality: Causes, Consequences and Policy Responses

32 Pages Posted: 24 Mar 2015

See all articles by Ravi Kanbur

Ravi Kanbur

Cornell University; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

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Date Written: March 2015

Abstract

A stylized prediction of the development economics discourse is that informality will disappear with development. And yet in the last twenty years conventional measures of informality, far from declining, have either remained stagnant or have actually increased. What exactly is informality and what are its magnitudes and trends? What are the causes of informality and why is it not decreasing as predicted by standard theories of development? What are the consequences for inclusive economic growth of a large and increasing informal sector? What are feasible and desirable policy responses to informality? These are the questions which motivate this broad based survey and overview of informality, with particular focus on India.

Keywords: informal labour, informal sector, informality, informality and poverty

JEL Classification: J46, O17

Suggested Citation

Kanbur, Ravi, Informality: Causes, Consequences and Policy Responses (March 2015). CEPR Discussion Paper No. DP10509, Available at SSRN: https://ssrn.com/abstract=2584026

Ravi Kanbur (Contact Author)

Cornell University ( email )

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Centre for Economic Policy Research (CEPR)

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IZA Institute of Labor Economics

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