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Book part
Publication date: 19 November 2019

Yvonne A. Lamptey and Yaw A. Debrah

The informal sector is expanding in the developing countries while the formal sector is shrinking. The loss of employees through workforce reduction strategies has adversely…

Abstract

The informal sector is expanding in the developing countries while the formal sector is shrinking. The loss of employees through workforce reduction strategies has adversely affected trade union membership in Ghana. To make up for the loss of members, the trade unions recruit the informal workers into their fold. Using in-depth interviews, this study explores trade union organization of informal workers and the suitability of these forms of organization within the informal sector in Ghana. The results indicate that formal trade unions are desperately adopting traditional methods and structures to organize informal workers into their fold without success. There is therefore the need for the informal workers to self-organize and for the trade unions to create streams of membership for affiliation.

Details

Advances in Industrial and Labor Relations
Type: Book
ISBN: 978-1-83909-192-6

Keywords

Book part
Publication date: 22 May 2015

Colin C. Williams

This chapter evaluates the cross-national variations in the proportion of employment that is in informal sector enterprises and evaluates competing theories which view these…

Abstract

Purpose

This chapter evaluates the cross-national variations in the proportion of employment that is in informal sector enterprises and evaluates competing theories which view these cross-national variations to result from either economic underdevelopment (modernisation explanation), high taxes, public sector corruption and over-regulation of work and welfare (neo-liberal explanation) or conversely, a lack of intervention in the realm of social protection (political economy explanation).

Methodology/approach

To evaluate these competing explanations, the International Labour Organisation’s (ILO) country surveys that investigate the scale of employment in informal sector enterprise in 43 developing and transition economies, along with the World Bank database of development indicators, are analysed here.

Findings

The finding is that lower levels of employment in informal sector enterprises are closely associated with economic development, lower levels of public sector corruption and state intervention in the form of higher tax rates and social transfers to protect workers from poverty.

Research implications

This chapter reveals the need to move beyond treating these contrasting representations as competing explanations and to recognise how all are required to more fully explain the prevalence of informal sector entrepreneurship.

Practical/social implications

Tackling employment in informal sector enterprise is shown to require broader economic and social policies associated with the modernisation of economies, tax rates, social protection and poverty alleviation.

Originality/value

One of the first evaluations of the competing explanations for why some countries have higher levels of employment in informal sector enterprises.

Details

Exploring Criminal and Illegal Enterprise: New Perspectives on Research, Policy & Practice
Type: Book
ISBN: 978-1-78441-551-8

Keywords

Book part
Publication date: 16 November 2016

Claudia Trentini

In the last decade, Argentina has experienced a considerable decline in informal employment and wage dispersion. This paper extends a search model with exogenous human capital…

Abstract

In the last decade, Argentina has experienced a considerable decline in informal employment and wage dispersion. This paper extends a search model with exogenous human capital accumulation to include the informal sector. The model is parametrized to match Argentinian data between 1996 and 1998 – before the onset of the declining trend – and it is used to investigate the contribution of labor market measures to the falling informality, unemployment, and wage dispersion. The findings indicate that institutional factors did not contribute to the positive labor market trends observed; on the contrary, results show that higher severance pay and minimum wages increase informality and that the introduction of unemployment assistance contributed to the spread of informal contracts across the work force. Further, I find that compliance with minimum wage regulation strongly affects the final impact of these policies. While non perfect compliance might reduce unemployment, it reinforces the incentives of workers to move to the informal sector.

Details

Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting
Type: Book
ISBN: 978-1-78560-993-0

Keywords

Book part
Publication date: 12 April 2012

Ilhom Abdulloev, Ira N. Gang and John Landon-Lane

How is migration related to informal activities? They may be complementary since new migrants may have difficulty finding employment in formal work, so many of them end up…

Abstract

How is migration related to informal activities? They may be complementary since new migrants may have difficulty finding employment in formal work, so many of them end up informally employed. Alternatively, migration and informality may be substitutes since migrants’ incomes in their new locations and income earned in the home informal economy (without migration) are an imperfect trade-off. Tajikistan possesses both a very large informal sector and extensive international emigration. Using the gap between household expenditure and income as an indicator of informal activity, we find negative significant correlations between informal activities and migration: the gap between expenditure and income falls in the presence of migration. Furthermore, Tajikistan's professional workers’ ability to engage in informal activities enables them to forgo migration, while low-skilled nonprofessionals without postsecondary education choose to migrate instead of working in the informal sector. Our empirical evidence suggests migration and informality substitute for one another.

Details

Informal Employment in Emerging and Transition Economies
Type: Book
ISBN: 978-1-78052-787-1

Keywords

Book part
Publication date: 26 August 2010

Francesco Devicienti, Fernando Groisman and Ambra Poggi

Poverty and informal employment are often regarded as correlated phenomena. Many empirical studies have shown that informal employment has a causal impact on household poverty…

Abstract

Poverty and informal employment are often regarded as correlated phenomena. Many empirical studies have shown that informal employment has a causal impact on household poverty, mainly through low wages. Yet other studies focus on the reverse causality from poverty to informality, arising from a range of constraints that poverty poses to jobholders. Only recently have empirical researchers tried to study the simultaneous two-way relationship between poverty and informality. However, existing studies have relied upon cross-sectional data and static econometric models.

This chapter takes the next step and studies the dynamics of poverty and informality using longitudinal data. Our empirical analysis is based on a bivariate dynamic random-effect probit model and recent panel data from Argentina. The method used provides a means of assessing the persistence over time of poverty and informal employment at the individual level, while controlling for both observed and unobserved determinants of the two processes. The results show that both poverty and informal employment are highly persistent processes. Moreover, positive spillover effects are found from past poverty on current informal employment and from past informality to current poverty status, corroborating the view that the two processes are also shaped by interrelated dynamics in segmented labor markets.

Details

Studies in Applied Welfare Analysis: Papers from the Third ECINEQ Meeting
Type: Book
ISBN: 978-0-85724-146-7

Book part
Publication date: 11 July 2022

Peter Mhando and Lindah Mhando

The chapter evaluates trust-based and emotional intelligence (EI) approaches in Tanzania’s informal sector entrepreneurs, from mali kwa mali (barter trade), mali kauli

Abstract

The chapter evaluates trust-based and emotional intelligence (EI) approaches in Tanzania’s informal sector entrepreneurs, from mali kwa mali (barter trade), mali kauli (trust-based credit) to collective or technology-based upatu (revolving credit). It analyses both vertical and horizontal trust, and the depth of linkage to growth and sustainability of entrepreneurship in the informal sector.

The chapter invokes experiences of informal sector entrepreneurs including itinerant hawkers (machinga), food vendors (mama lishe or mama ntilie) and motorcycle drivers (bodaboda). The unique trust-based approaches mali kwa mali and mali kauli in entrepreneurial undertakings extends from colonial times to post economic liberalisation and contemporary Tanzania. Mali kauli, a creative traditional credit practice, is a unique approach that facilitates and sustains micro-retail sub-sector and livelihoods in urban and rural Tanzania. Although the objective remains business profitability, sustainability of entrepreneurial ventures does not depend on it alone. Trust and EI are well invested in these approaches.

The chapter draws from past work on managing in the informal economy to derive theoretical and practical implications, and how trust and EI plays a role in the Tanzanian informal entrepreneurial circles.

Details

Responsible Management in Africa, Volume 2: Ethical Work and Sustainability
Type: Book
ISBN: 978-1-80382-494-9

Keywords

Book part
Publication date: 4 June 2005

Karrie Ann Snyder

By synthesizing case studies on the informal economy throughout the world, I show that women and men specialize in different tasks, work in separate settings, and have differing…

Abstract

By synthesizing case studies on the informal economy throughout the world, I show that women and men specialize in different tasks, work in separate settings, and have differing access to positions of economic power in the informal economy. Moreover, women are more likely than their male counterparts to seek employment in the informal sector. I also explore why gender segregation is such a marked feature of the informal economy by examining characteristics of the informal sector that encourage such gender segregation including the relationship between the informal and formal economies and the social status of informal work.

Details

Gender Realities: Local and Global
Type: Book
ISBN: 978-0-76231-214-6

Book part
Publication date: 16 November 2016

Aysit Tansel and Elif Oznur Acar

This study investigates the formal/informal employment earnings gap in Turkey. We focus on the earnings differentials that can be explained by observable characteristics and…

Abstract

This study investigates the formal/informal employment earnings gap in Turkey. We focus on the earnings differentials that can be explained by observable characteristics and unobservable time-invariant individual heterogeneity. We first, estimate the standard Mincer earnings equations using ordinary least squares (OLS), controlling for individual, household, and job characteristics. Next we use, panel data and the quantile regression (QR) techniques in order to account for unobserved factors which might affect the earnings and the intrinsic heterogeneity within formal and informal sectors. OLS results confirm the existence of an informal sector penalty almost half of which is explained by observable variables. We find that formal-salaried workers are paid significantly higher than their informal counterparts and of the self-employed confirming the heterogeneity within the informal employment. QR results show that pay differentials are not uniform along the earnings distribution. In contrast to the mainstream literature which views informal self-employment as the upper-tier and wage-employment as the lower-tier, we find that self-employment corresponds to the lower-tier in the Turkish labor market. Finally, fixed effects estimation indicates that unobserved individual characteristics combined with controls for observable characteristics explain the pay differentials between formal and informal employment entirely in the total and the female sample. However, informal sector penalty persists in the male sample.

Details

Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting
Type: Book
ISBN: 978-1-78560-993-0

Keywords

Book part
Publication date: 11 June 2009

Rifat Akhter and Kathryn B. Ward

Purpose – The main objective of this research is to explore the impacts of globalization on gender empowerment.Methodology – This research uses a design that combines lagged…

Abstract

Purpose – The main objective of this research is to explore the impacts of globalization on gender empowerment.

Methodology – This research uses a design that combines lagged cross-sectional and cross-sectional analyses. We have used ordinary least square regression. The sample size for this research is 48–70 nation-states. We have used gender empowerment measurement as an indicator of decision-making power that women in a society gain in decision making as a group.

Findings – Our findings illustrate variable effects of global economy on gender empowerment. Higher commodity concentration significantly lowers women's access to the formal and informal labor force and women's decision-making power after controlling for economic development, culture, and state's location in the global economy. Foreign direct investment lowers women's share in both the formal and informal labor force and women's decision-making power, while increasing women's share of secondary education. Thus, this research examines wider dimensions of women's experiences. We also find that some policies have positive effects, whereas others have negative effects on gender empowerment.

Originality/value of the chapter – Previous research on globalization and development has discussed the impacts of globalization on women's empowerment. However, researchers have either used women's access to formal work or education or gender development scores as an indicator of women's empowerment. Researchers have not captured women's empowerment completely. We have overcome this limitation by defining empowerment as a complex of access to resources (access to education, formal and informal labor force) and decision-making power (gender empowerment scores).

Details

Perceiving Gender Locally, Globally, and Intersectionally
Type: Book
ISBN: 978-1-84855-753-6

Book part
Publication date: 19 December 2017

Michael Rogan, Sally Roever, Martha Alter Chen and Françoise Carré

In this chapter, we aim to illustrate some of the forms taken by informal employment in the global south and how these can best be understood by adopting a wider analytical lens…

Abstract

In this chapter, we aim to illustrate some of the forms taken by informal employment in the global south and how these can best be understood by adopting a wider analytical lens than has been applied in much of the precarious employment literature. We draw on the findings of a recent study of the working conditions of urban informal workers from 10 cities in the global south. The study consisted of focus groups (15 in each city) conducted through the framework of a participatory informal economy appraisal as well as a survey of 1,957 home-based workers, street vendors, and waste pickers. Our findings illustrate a number of ways in which these three groups of informal workers are embedded within the formal economy. While they are not engaged in wage employment, they play subordinate roles to both formal sector firms within global production networks and unequal production relations and to the state through, inter alia, constrained access to public spaces and regulation. In order to interpret these findings, we apply Agarwala’s (2009) “relational” lens to demonstrate how risks and costs are transferred to workers who constitute the “real economy” in much of the global south. Given the often disguised connections between informal employment and the formal economy, this approach also provides a bridge to understanding precarious working conditions and the effects of globalization outside of the industrialized north.

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