Income Concentration, Market Size and Informal Sector in Africa

In this study, we analyze the link between income concentration and the size of the informal sector. We construct a simple model where income concentration determines demand and firms decide whether to operate in the formal or the informal economy is outlined. The government collects taxes and returns them to society either as a productive public good for its use by formal firms or as transfers to the poor. It is further postulated that income distribution affects the response of the informal sector to different fiscal policies, either demand or supply-orientated. In this case, redistribution towards the middle class decreases the size of the informal sector and increases the capacity of fiscal instruments to reduce informality. Data concerns 38 Africans’ countries in which the characteristic of income distribution is similar across countries. Using this comparable macro-level panel data between 1991 and 2013, we find strong evidence that high-income concentration leads to a large informal sector. Furthermore, an economic policy, including the effective application of the tax and regulatory procedures, should help to keep down the size of the informal economy.

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The Shadow Pandemic: Examining the Impact of COVID-19 on Zimbabwean Informal Sector in Chiredzi District

International Journal of Humanities, Management and Social Science ◽

10.36079/lamintang.ij-humass-0401.190 ◽

2021 ◽

Vol 4 (1) ◽

pp. 1-10

Author(s):

Bismark Mutizwa

Keyword(s):

Informal Sector ◽

Informal Economy ◽

Preventive Measures ◽

Developing Economies ◽

Illustrative Case ◽

Government Grants ◽

Remedial Actions ◽

The Government ◽

The Impact ◽

Informal Traders

COVID-19 has disrupted the business sector globally, ushering developed and developing economies into an unprecedented recession beyond anything experienced in nearly a century. Governments across the globe have adopted a myriad of preventive measures. These remedial actions vary from one country to the other. Nonetheless, in Zimbabwe the government gave a blind eye on the informal sector as evidenced by the adopted preventive measures which neglected the plight of informal traders. To this end, this research interrogates the shadow pandemic in the Zimbabwean informal sector using Chiredzi District as an illustrative case study. Documentary review and key informed interviews were at the core of research methodology. The study found out that informal economy businesses are excluded from government grants, closure of businesses, failure to pay rentals, disruption of the supply chain, psychological impact and family dysfunctional are the quandaries causing a shadow pandemic. Inclusion of informal economy businesses in policies and government grants, government should negotiate with landlords, informal traders should be allowed to operate and inclusive social nets are the possible remedial actions that the government can adopted.

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Una propuesta de recuperación económica en una economía de recesión:

SATHIRI ◽

10.32645/13906925.10 ◽

2016 ◽

pp. 71

Author(s):

Austin Obiajulu Halim Joe

Keyword(s):

Economic Growth ◽

Crude Oil ◽

Free Trade ◽

Brain Drain ◽

Government Revenue ◽

Fiscal Policies ◽

Commercial Activities ◽

The Poor ◽

The Government ◽

The Cost

Many critics of dollarization of Ecuadorian economy should also count the achievements dollarization policy has avail Ecuador. Economically, countries with balance of payment problems are mandated internationally to devalue their currency, devaluation of Ecuadorian Sucre would have been a disaster for Ecuador seeing that Ecuador as a country is not industrially developed rather it's operating a monotonic economy highly dependent on export of crude oil and pre-processed agro product. Secondly, seignior age which to Ecuador is a huge gain, since the country is not responsible for the cost of printing their official currency.Paradoxically, would have been an expenses if the government operates a Sucre economy. Although the present government has made tremendous changes and also measurable achievements Kudos to the government of Rafael Correa, there is still enormous economic challenges and Immense gap between the poor and the reach which next government need to tackle to alleviate the present economic hardship. Establishment of a free trade zone is a panacea to conquer challenges posed by Colombian Pesos to Ecuadorian economy. FTZ is a card changer to minimize brain drain from border provinces and rekindle commercial activities as well as generate enormous employment opportunity which will in turn increase government revenue , exterminate poverty and curb recession being experienced presently by the economy due to fiscal policies. Tax policy is economically lucrative in correcting economic anomalies but government should also take into consideration the ratio of unemployment to Employment which directly determines purchasing power and any attempted increment in taxation should be within a stipulated economic period in order to match economic growth with development.

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Governance and Income Inequality

The Pakistan Development Review ◽

10.30541/v45i4iipp.751-760 ◽

2006 ◽

Vol 45 (4II) ◽

pp. 751-760 ◽

Cited By ~ 2

Author(s):

Saima Shafique ◽

Rashida Haq

Keyword(s):

Economic Growth ◽

Growth Rate ◽

Developing Countries ◽

Economic Policy ◽

Income Inequality ◽

Income Distribution ◽

Growth And Development ◽

Well Being ◽

Low Level ◽

The Poor

Major problems of developing countries are unequal income distribution and low growth rate, which affect their welfare aspects. It was implicitly assumed that whenever we achieve target of higher growth rate, benefit of growth would automatically trickle down to the poor. History of developing countries shows that the rich benefited more than the poor as evidenced by rising income inequality during the period of higher economic growth. The economic policy changes are often triggered by the logic of low level of equilibrium of output level, employment and income distribution. To overcome this low level of equilibrium trap, government often adopt polices so as to achieve high level of income and employment growth and development, and equitable income distribution. Coherent policy instruments are essential to meet these policy targets. Impact of any macro economic policy has been examined by studying its impact on economic growth and income distribution. In recent years polices have been directed toward reducing the level of poverty and inequality through raising quality of life in society by providing efficient and effective governance. This new economic philosophy has resulted in a massive change in the policy orientation of countries; the priority is now centred on issue of governance and focus is now shifted towards a qualitative nature of its growth and development. According to Sen (1983), the realisation of human capabilities, that enlarge the range of human choices, is essential for a broader notion and measure of economic well-being. The institutional frame work is then considered as one of the essential elements for translating growth and well-being into a sustainable process.

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European Policy Reactions to the Financial Crisis

STUDI ECONOMICI ◽

10.3280/ste2010-100011 ◽

2010 ◽

pp. 191-218

Author(s):

Carlo Panico ◽

Francesco Purificato

Keyword(s):

Monetary Policy ◽

Economic Policy ◽

Financial Crisis ◽

Financial Institutions ◽

Euro Area ◽

Fiscal Policies ◽

Productive Activity ◽

European Policy ◽

The Government ◽

Recent Financial Crisis

The paper examines how economic policy have been carried out in Europe during the recent financial crisis. It focuses on the changes introduced in the operational procedures of monetary policy in the euro area in 2007 and 2008, pointing out that the objective of the authorities has been to respond to the liquidity needs of the monetary financial institutions, avoiding to loose control over M3. The paper argues that the interventions of the Eurosystem have produced satisfactory results and underlines the problems generated by the fall in productive activity and the need to face them with fiscal policies instruments. The inefficient forms of coordination between monetary and fiscal policies and the management of the government debt in some euro area countries are seen as the main sources of preoccupation for the evolution of the crisis.

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Exploring the relationship between corruption, income inequality and informal sector in developing countries: a panel quantile approach

Journal of Economic and Administrative Sciences ◽

10.1108/jeas-03-2021-0043 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Abdul Rashid ◽

Farooq Ahmad ◽

Sarir Ud Din ◽

Shar Zaman

Keyword(s):

Developing Countries ◽

Income Inequality ◽

Income Distribution ◽

Informal Sector ◽

Developing Economies ◽

Content Type ◽

Labor Exploitation ◽

Panel Quantile Regression ◽

Regression Approach ◽

The Government

PurposeThis paper aims to explore the impact of corruption (CP) on income inequality (IN) by considering the size of informal sector (IFS) at different levels of percentiles.Design/methodology/approachThis paper uses a panel quantile regression approach for a sample of 50 developing countries. The study also applies panel co-integration (Kao residual co-integration test) in order to examine the long-run relationship between CP and IN.FindingsThis paper using a panel quantile regression approach shows that the high incidence of IFS in an economy marginalizes CP's positive effect because it works as a source of poor peoples' livelihood and skillful individuals. The spread of IFSs in the developing economies may raise earnings among groups and individuals who remain unemployed. Moreover, the results show that CP creates asymmetry in income distribution; fascinatingly, the asymmetric income distribution is high when CP is at higher percentiles.Research limitations/implicationsDue to non-availability of IFS, we restrict our analysis up to 50 developing countries.Practical implicationsCP devastates the effectiveness of institutions over time. Therefore, the government should have to take bold steps to reduce CP in society. Another policy implication of this study is that the government should reduce CP to decrease IN in less developing countries. Moreover, to increase the net base, the authorities need to bring IFS under the umbrella of regulation to avoid inequality in society. In developing economies, a higher part of labor force is related to IFS; therefore, our findings suggest a dire need to reduce labor exploitation in IFS. The policymakers can reduce labor exploitation by reducing the size of IFS, which ultimately reduces IN.Social implicationsOn the basis of the authors’ findings, this paper further suggests that it is mandatory for government to reduce CP in order to reduce IN. Moreover, to reduce IN, one needs to reduce the size of IFS.Originality/valueThis study is unique as it is the first that examined the role of IFS in establishing the effect of CP on IN for developing countries at different percentiles.

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Reclaiming Public Spaces in the Informal Economy: Migrant Mothers who Defy Gender Traditions in Cochabamba, Bolivia

Journal for Undergraduate Ethnography ◽

10.15273/jue.v10i1.9948 ◽

2020 ◽

Vol 10 (1) ◽

pp. 53-68

Author(s):

Margaret Giacalone

Keyword(s):

Informal Sector ◽

Informal Economy ◽

Governmental Organizations ◽

Non Governmental Organizations ◽

Safe Work ◽

Ethnographic Data ◽

The Government ◽

Role Responsibilities ◽

And Control ◽

The City

In the city of Cochabamba, Bolivia, mothers from the campo have become the engine of the Bolivian economy and leaders in their communities. The issue: they work in the informal sector, which is disapproved by the government and general population. Families from the countryside have lost their homes and traditional means of living as a product of policies in favor of foreign competition. Mothers have become the leaders of their homes and found jobs in the city that have further burdened their role responsibilities. Since there are few safe work opportunities that support indigenous migrant mothers’ maternal identities, they create their own jobs in spaces traditionally dominated by machista values. Despite intersecting obstacles of gender, class and race, mothers are resilient and capable of redefining spaces and reframing narratives of their motherhood. Drawing on ethnographic data, this article depicts how migrant mothers achieve empowerment, survival and control of their identities thanks to the agency they have found in traditional employment, entrepreneurship and cooperative entrepreneurship within the informal sector, as well as support from non-governmental organizations.

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Is Informal Sector Employment Marginal to Formal Sector Growth?

The Pakistan Development Review ◽

10.30541/v51i4iipp.543-564 ◽

2012 ◽

Vol 51 (4II) ◽

pp. 543-564 ◽

Cited By ~ 4

Author(s):

Nadia Tahir ◽

Pervez Tahir

Keyword(s):

Informal Sector ◽

Informal Economy ◽

Labour Force ◽

Value Added ◽

The State ◽

Formal Sector ◽

Informal Workers ◽

Role Of The State ◽

The Government

Pakistan has adopted a neoliberal regime to open the economy to global competition and reduce the role of the state. This directional change brought increased flow of overseas remittances, speculative investment, and consumerism. Consequently, the economy in mid-2000s grew but commodity-producing sector contracted. Public sector spending has been falling, especially on social sectors. There are inadequate provisions for social security and employment based income guarantees. However, this growth and stability was short lived and there is now a fragile state and slowing economy. In the absence of an effective regulatory role of the state, and due to the failure in developing a long-term strategy to harness the labour force potential, there is a huge informal sector existing side by side with the formal economy. Almost 22 million of the employed labour force is earning its livelihood in streets and the government has no record of it. The informal workers can be categorised as self-employed workers and wage workers, doing diversified jobs from petty traders to small producers and from rickshaw driver to shoe shiners. It is difficult to measure the value added contribution of the informal sector in Pakistan. Indirect estimation approaches on the basis of employment and hours worked have been used to estimate the contribution of informal economy. For instance, Idris (2008) estimates the share at 36.8 percent of GNP, which is significant. Arby, Malik and Hanif (2010) measured the size of informal economy in Pakistan through a monetary approach. They find that the size has declined considerably.

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The informal economy and its relationship with the state

The Oxford Handbook of Kenyan Politics ◽

10.1093/oxfordhb/9780198815693.013.58 ◽

2020 ◽

pp. 530-544

Author(s):

Jane N. O. Khayesi

Keyword(s):

Informal Sector ◽

Informal Economy ◽

Economic Activity ◽

The State ◽

Institutional Framework ◽

Informal Workers ◽

Full Implementation ◽

The Government ◽

The Impact ◽

New Jobs

This chapter examines the function of the informal economy in Kenya and the shifting government responses to it through a review of key policies and documents from 1971 to 2017. As in many African states, the Kenyan informal economy is a critical source of employment and economic activity, providing 80 percent of new jobs in an average year. The key finding of this chapter is that the Kenyan government has undertaken a number of initiatives to support the informal sector but the impact of these initiatives remains controversial; some have been actively resisted by informal workers and businesses that believe their impact would be damaging. Thus, although a policy and institutional framework has been put in place with the official aim of encouraging the growth of the informal economy, tensions with the government remain, and there is a pressing need for the full implementation of a number of measures, most notably licensing.

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EMPLOYMENT IN THE INFORMAL SECTOR IN NIGERIA: IMPLICATIONS FOR SUSTAINABLE ECONOMIC DEVELOPMENT

10.36108/unizikjb/1202.40.0160 ◽

2021 ◽

Vol 4 (1) ◽

Author(s):

Amaka Ogochukwu Onwo ◽

Gladys Amaechi Ohazulike

Keyword(s):

Informal Sector ◽

Informal Economy ◽

Industrial Sector ◽

Development Planning ◽

Economic Downturn ◽

Large Share ◽

The Past ◽

Global Workforce ◽

Global Concern ◽

The Government

The problem of employment has become a central global concern in recent times. This makes the government and development partners to be fully engaged in finding a lasting solution to the problems. In the past, development planning efforts were concentrated on the development of modern industrial sector. Today, there is renewed interest in the informal economy worldwide. This is because a large share of the global workforce and economy is informal and because the informal sector is growing in many contexts and appearing in new places and guises. The informal sector serves as a buffer against unemployment in times of economic downturn, allowing an increasing share of the population to earn a livelihood from the sector rather than stay openly unemployed with no income. The sector has also played a key role in cushioning the adverse impact of economic crises. The paper therefore interrogated the nature of employment in the informal sector and is anchored on Modernisation theory. This paper is based on a desk and literature review of relevant articles and publications as well as on employment and the informal sector. The paper revealed that Nigerian Informal Sector is a major contributor to the Nigerian economy, accounting for a significant portion of employment and national Gross Domestic Product and also the informal sector currently accounts for over half of global employment and as much as 90% of employment in some of the developing countries like Nigeria. The paper therefore recommends that efforts should be made by the government and its agencies to create more jobs. Secondly, policies should be introduced to address identified challenges in the informal sector towards improving productivity and incomes of informal sector workers.

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Evaluation of Investment and Return in Informal Sector: A Case of Chitwan District

Tribhuvan University Journal ◽

10.3126/tuj.v28i1-2.26246 ◽

2013 ◽

Vol 28 (1-2) ◽

pp. 235-252

Author(s):

Ramchandra Dhakal

Keyword(s):

Informal Sector ◽

Informal Economy ◽

Political Stability ◽

Formal Sector ◽

The People ◽

Determining Factors ◽

Informal Economies ◽

Effective Policy ◽

Males And Females ◽

The Government

Developing counties, like Nepal is still in tense to maintain the level of political stability, economic growth, development, and employment which are the main issues in one side of the economy and on the other, the majority of the people find shelter in the informal sector in the absence of sluggish growing formal sector. Most of the people are engaged in informal economies that have created varying effects on them in terms of employment and income generations. The latter seems to be determined mainly by the household property, level of literacy, the number of persons employed in any unit and investment. However, there is no apparent differentiation in the income earnings between males and females, the latter seems to be more efficient and articulate in many ways. Income earnings have been higher in the urban location than that of the rural sector. Income level and the determining factors seem to vary among different location and sexes. This study tries to compare the nature and characteristics of informal sector both at national as well as international levels. The government must play effective policy as well as to uplift informal economy for the economic development as a whole. To identify the informal sector properly in Nepal, a national wide survey that covers overall aspects should be considered before taking any step.

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