Labor Market Modeling and the Urban Informal Sector: Theory and Evidence

2018 ◽  
pp. 145-172 ◽  
Author(s):  
Gary S. Fields
Keyword(s):  
Developing Countries ◽  
Labor Market ◽  
Informal Sector ◽  
Theoretical Models ◽  
Small Scale ◽  
Formal Sector ◽  
Self Employment ◽  
Wage Employment ◽  
Sector Theory ◽  
Urban Informal Sector

The purpose of this chapter is to assess the compatibility between theoretical models of the urban informal sector (UIS) and empirical evidence on the workings of that sector in the context of developing countries’ labour markets. The major point is that, although the UIS is an excellent idea which has served us well in the 1970s and 1980s, there is a need in the next round of research to refine the terminology and the models in light of empirical findings which have come to the fore in the interim. Wage employment or self-employment in small-scale units may be better than or worse than employment in the formal sector. This is not a new point: diversity of earning opportunities and other job characteristics within the informal sector has long been noted. But only recently has this view come to the fore.

scholarly journals Problems of Working Women in the Rural Informal Sector of Punjab (Pakistan)

1999 ◽  
Vol 4 (2) ◽  
pp. 89-99
Author(s):  
Karamat Ali ◽  
Abdul Hamid Abdul Hamid
Keyword(s):  
Developing Countries ◽  
Informal Sector ◽  
Working Women ◽  
Variable Structure ◽  
Policy Instrument ◽  
Small Scale ◽  
Formal Sector ◽  
Economic Activities ◽  
The One

The informal sector plays a significant role in Pakistan’s economy as well as in other developing countries. The role of the informal sector in solving the unemployment problem of Third World countries has become the focus of a conceptual and empirical debate in recent years. Most of the research takes a favourable view of this sector and suggests that it should be used as a policy instrument for the solution of the most pressing problems of developing countries, such as unemployment, poverty, income inequalities, etc. Before proceeding further, we will define the informal sector and differentiate it from the formal sector. There are various definitions, but the one given in an ILO report (1972) is generally considered the best. According to this report, informal sector activities are ways of doing things characterised by a heterogeneous array of economic activities with relative ease of entry, reliance on indigenous resources; temporary or variable structure and family ownership of enterprises, small scale of operation, labour intensive and adapted technology, skills acquired outside the formal school system, not depending on formal financial institutions for its credit needs; unregulated and unregistered units, and not observing fixed hours/days of operation.

Operations and Linkages: A Study of Nagaland’s Urban Informal Sector

2015 ◽  
Vol 11 (4) ◽  
pp. 291-310
Author(s):  
Imlisunep Changkery ◽  
Chanchibemo Shiteo
Keyword(s):  
Developing Countries ◽  
Informal Sector ◽  
Urban Poor ◽  
High Growth ◽  
Formal Sector ◽  
Value Addition ◽  
The Past ◽  
The City ◽  
Urban Informal Sector

The urban informal sector has attracted renewed interest in the present day development circle despite the widely held notion in the past three decades that it would shrink once an economy achieved high growth. Due to its enormous capacity to sustain and provide livelihood to the urban poor, it is being reckoned as a significant sector in the economy of developing countries for providing income and alleviating poverty. This sector has its own characteristics that allow us to understand and explain it differently from the formal sector. This paper deals with the structure and characteristics of the urban informal sector in the city of Dimapur and examines the nature of the enterprises, the structure of its employment, capital, turnover and value addition. It also looks into the nature of linkages that it shares with the formal sector.

Empirical Investigation of Formal and Informal Sectors in Waste Recycling of the Municipal Waste Management System of Developing Countries: The Case Study of Lagos State

2016 ◽  
Vol 7 (2) ◽  
pp. 21 ◽  
Author(s):  
Oladipupo Salau ◽  
Lalita Sen ◽  
Samuel Osho ◽  
Oluwatoyin Adejonwo-Osho
Keyword(s):  
Developing Countries ◽  
Waste Management ◽  
Informal Sector ◽  
Waste Recycling ◽  
Recycling Rate ◽  
Waste Collection ◽  
Formal Sector ◽  
Municipal Waste Management ◽  
Lagos State ◽  
Formal And Informal Sectors

Municipalities in metropolitan cities of developing countries often find it difficult to cope with the onerous task of providing waste services to their citizens due to financial constraints and poor infrastructure.  In most of these cities, waste collection services are grossly inadequate as less than half the population is served with regular and efficient waste services.  However, the shortcomings of the formal waste management system are compensated by the activities of the informal sector engaged in waste collection and make significant contributions to the MWMS through material recovery and waste recycling. In view of this, the study focuses on the roles of the formal and informal sector in municipal waste management with regards to their impacts on the recycling rate of Lagos State. In this study, we measured and compared the recycling rates between the formal and informal sectors to determine their impacts on the recycling rates of Lagos State. The study relies on primary field data, site visits and observations backed by secondary sources to investigate the range of informal sector activities in comparison to the formal sector. The findings indicate that, while both sub-sectors play significant roles in the MWMS, the informal recycling activities contribute more to the recycling rate of Lagos state than the formal sector.

scholarly journals Informality and Development

2014 ◽  
Vol 28 (3) ◽  
pp. 109-126 ◽  
Author(s):  
Rafael La Porta ◽  
Andrei Shleifer
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Economic Development ◽  
Informal Sector ◽  
Economic Activity ◽  
Organizational Form ◽  
Formal Sector ◽  
Dual Models

In developing countries, informal firms account for up to half of economic activity. They provide livelihood for billions of people. Yet their role in economic development remains controversial with some viewing informality as pent-up potential and others viewing informality as a parasitic organizational form that hinders economic growth. In this paper, we assess these perspectives. We argue that the evidence is most consistent with dual models, in which informality arises out of poverty and the informal and formal sectors are very different. It seems that informal firms have low productivity and produce low-quality products; and, consequently, they do not pose a threat to the formal firms. Economic growth comes from the formal sector, that is, from firms run by educated entrepreneurs and exhibiting much higher levels of productivity. The expansion of the formal sector leads to the decline of the informal sector in relative and eventually absolute terms. A few informal firms convert to formality, but more generally they disappear because they cannot compete with the much more-productive formal firms.

Entrepreneurship and Sustainable Tourism: The Houseboats of Kerala

2002 ◽  
Vol 4 (1) ◽  
pp. 7-20 ◽  
Author(s):  
Jithendran Kokkranikal ◽  
Alison Morrison
Keyword(s):  
Developing Countries ◽  
Sustainable Tourism ◽  
Local Communities ◽  
Entrepreneurial Activity ◽  
Social Benefits ◽  
Small Scale ◽  
Descriptive Case Study ◽  
Self Employment ◽  
Tourism Product

Within developing countries it has been identified that one means of achieving sustainable tourism is through the effective engagement of local communities. In particular, this involves the encouragement of indigenous entrepreneurship, often in the forms of self-employment and small-scale enterprises. The aim is to maximise potential economic and social benefits of tourism development within the host destinations. This paper provides a conceptual framework and descriptive case study within which to analyse an example of indigenous entrepreneurship as evidence in the operators of a houseboat tourism product in the State of Kerala, India. Conclusions are drawn relative to the sustainability of both the product and indigenous entrepreneurial activity.

scholarly journals Agglomeration effects and informal firms in the internal structure of cities

2019 ◽  
Vol 27 (80) ◽  
pp. 93-107
Author(s):  
Andres Dominguez
Keyword(s):  
Developing Countries ◽  
Standard Deviation ◽  
Internal Structure ◽  
Informal Sector ◽  
Local Economy ◽  
Earthquake Risk ◽  
Formal Sector ◽  
Economic Activities ◽  
Standard Deviation Increase ◽  
Content Type

Purpose This paper aims to estimate the effect of agglomeration on the probability of being an informal firm in Cali, Colombia. Informal firms produce legal goods but do not comply with official regulations. This issue is relevant because, similar to other developing countries, the informal sector in Colombia employs more than 50 per cent of the workforce. The results of this study demonstrate that one standard deviation increase in agglomeration reduces by 52 per cent the probability of being informal. Results are consistent with the idea that informal firms benefit less from agglomeration because of legal restrictions that block the relationship with formal firms. Design/methodology/approach The objective of the present paper is to estimate the effect of agglomeration on the probability that a firm – given a location – chooses to be informal. The authors deal with endogeneity issues by using soil information related to earthquake risk, which reduces the height of buildings and therefore increases the cost of agglomeration. The analysis focuses on Cali, Colombia, where the informal sector employs 60 per cent of the workforce. The registration of economic activities is used as a criterion to identify informal firms, in such a way that the percentage of informal firms is 42 per cent. Findings The authors find that the effect of agglomeration is strongly negative. The probability of being informal diminishes by 52 per cent when agglomeration increases by one standard deviation. Results in this paper shed light on how formal firms tend to be localized in high-density commercial and industrial areas, while informal firms are localized in low-density and peripheral areas where the land for production is cheaper and where they can avoid the control of authorities. Originality/value Theory argues that spatial production externalities and commuting costs are among the main forces that shape the city’s internal structure. Externalities include effects that increase firms’ production, and therefore workers’ income, when the size of the local economy grows. The authors now have strong evidence that firms’ productivity is positively related with the volume of nearby employment. Most of the empirical findings concern firms in the formal sector and, accordingly, the literature says little about the effect of agglomeration on informal firms’ location. However, this effect is crucial for developing countries where informal work is the main option for less-educated workers facing unemployment.

scholarly journals The Integration of Recycling Cooperatives in the Formal Management of Municipal Solid Waste as a Strategy for the Circular Economy—The Case of Londrina, Brazil

2020 ◽  
Vol 12 (24) ◽  
pp. 10513
Author(s):  
Isabella Tamine Parra Miranda ◽  
Reginaldo Fidelis ◽  
Dayanne Aline de Souza Fidelis ◽  
Luiz Alberto Pilatti ◽  
Claudia Tania Picinin
Keyword(s):  
Developing Countries ◽  
Municipal Solid Waste ◽  
Solid Waste ◽  
Informal Sector ◽  
Circular Economy ◽  
Legal Responsibility ◽  
Formal Sector ◽  
Informal Recycling ◽  
Msw Management ◽  
Operational Practices

In many developing countries, the informal recycling sector is responsible for reducing the amount of waste in landfills and supplying the needs of recycling industries. In the context of municipal solid waste (MSW) management, considering that developing countries aim to implement circular economy (CE) actions, it is essential to ensure the inclusion of waste pickers (catadores) in an adapted CE structure. This study analyzes the integration of recycling cooperatives in the formal management of municipal solid waste with recyclable potential (MSWRP) of a medium-sized municipality in Brazil, with the objective of ascertaining the contributions of cooperatives in an adapted CE structure and, at the same time, identifying a cooperative that can be used as a benchmarking option for other cooperatives, especially in relation to their organizational and operational practices. The results indicate that from this integration, cooperatives have legal responsibility in the management of MSWRP, resulting in the professionalization of its members and increasing their productivity. The results also revealed that the implementation of the CE in developing countries is, in a sense, conditioned to the performance of the informal sector in the recycling chain and, in addition, that the inclusion of cooperatives in the formal sector of MSWRP management can improve the rates of a municipality.

Spatiality, Clustering, and the Agglomeration Economies of Scale

2018 ◽  
pp. 224-247
Author(s):  
Simbarashe Show Mazongonda ◽  
Innocent Chirisa
Keyword(s):  
Developing Countries ◽  
Informal Sector ◽  
Large Scale ◽  
Economies Of Scale ◽  
Agglomeration Economies ◽  
Manufacturing Firms ◽  
Small Scale ◽  
Employment Creation ◽  
Strong Ties ◽  
Knowledge Economies

This chapter is based on a study that tests the realities of agglomeration economies of scale due to clustering of small-scale manufacturing firms of the informal type in Zimbabwe. Little has been studied on how the informal sector thrives on agglomeration economies of scale in developing countries. Despite this lack of research, this chapter acknowledges the existence of strong networks among small-scale manufacturers in urban Zimbabwe. These linkages, contrary to practices within large-scale manufacturers, are cemented by strong ties of entrepreneurialism. With big manufacturers, the ties are usually worker-based and less defined along entrepreneurial lines. Using spatial statistical approach, the test revealed that tool sharing, output-input relationship, employment creation, and sharing of knowledge economies of scale are also evident in developing countries.

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