scholarly journals Informal Sector and the Economy in Sri Lanka: A Survey of Literature

2015 ◽  
Vol 22 (03) ◽  
pp. 141-160
Author(s):  
Senanayake S. M. P. ◽  
Wimalaratana W. ◽  
Premaratne S. P.
Keyword(s):  
Sri Lanka ◽  
Informal Sector ◽  
Low Income ◽  
Secondary Data ◽  
Formal Sector ◽  
Economic Activities ◽  
State Regulations ◽  
Rural And Urban ◽  
Vertical Linkages ◽  
Entrepreneurial Activities

It is customary to include all economic activities that are not officially regulated as informal sector activities. The usual definitions used to distinguish the informal sector from the formal one appear to be problematic or fussy at their edges. This dichotomy is not mutually exclusive as often thought but is in fact interdependent in many respects. It is also argued that informal enterprises often move upwards in a hierarchy of organizational forms and finally end up as formal sector units through vertical linkages. The informal sector provides jobs for very vulnerable low-income groups in rural and urban sectors while contributing to the GDP immensely in developing countries. This paper critically examines the nature of the informal sector in Sri Lanka and studies the links between the informal sector and its economy. The analysis entirely employs secondary data and information. The findings of the study demonstrate that the domestic (traditional) agriculture and related activities in Sri Lanka are dominated by the informal sector, which in turn is further strengthened by underworld activities. The fear of tax burden, bribes, bureaucratic bungling, archaic rules and regulations, and lack of dividends in formal activities drive many people from the formal sector to the informal one. The informal sector provides jobs and reduces unemployment and underemployment, but in many cases the jobs are low paying and job security is poor. It bolsters entrepreneurial activities, but at the detriment of state regulations’ compliance, particularly regarding tax and labor regulations.

scholarly journals Education, Employment, and Income: An Overview of Rural-Urban Gaps in Vietnam

2020 ◽  
Vol 3 (2) ◽  
pp. 647-661
Author(s):  
Nguyen Phuong Le ◽  
Do Kim Chung
Keyword(s):  
Low Income ◽  
Rural Areas ◽  
Secondary Data ◽  
Formal Sector ◽  
Credit Access ◽  
Rural Workers ◽  
Doi Moi ◽  
Rural And Urban ◽  
Urban Rural ◽  
Urban And Rural Areas

Since the time of Doi Moi, the Vietnamese government has implemented a variety of policies to foster more balanced economic growth and development between rural and urban sectors. Several government policies that have been enacted were in the fields of agricultural reform and rural development. However, uneven development between urban and rural areas still exists. Based on secondary data, this study shows the urban-rural gaps in terms of education, employment, and income. The paper points out that the higher the level of education a person attains, the more considerable the disparities between urban and rural inhabitants can be observed. This fact strongly influences the occupations and incomes of urban as well as rural workers. The recommended policies to reduce the gaps between urban and rural areas include enhancing credit access for rural people, particularly to the poor; improving access to education and job training opportunities for formal sector employment; and entrepreneurial support to start household businesses, which all serve to increase income opportunities for low-income groups in the rural sector.

Class Differentiation and the Informal Sector in Amman, Jordan

1992 ◽  
Vol 24 (1) ◽  
pp. 27-38 ◽  
Author(s):  
Rebecca Miles Doan
Keyword(s):  
Informal Sector ◽  
Urban Poor ◽  
Formal Sector ◽  
Economic Activities ◽  
Single Class ◽  
The World ◽  
Formal And Informal Sectors

Studies of economic activities among the urban poor in various parts of the world have found more variation in the so-called informal sector than they had expected. The urban poor had typically been thought of as a kind of “reserve army” for the formal sector, an underclass at the margins of survival. Even early work that recognized the links between the formal and informal sectors lumped them together as a single class that ranked below all the others. The tendency to regard workers in the informal sector as members of an underclass masked the tremendous variations among them and between informal sectors in different places.

scholarly journals The Influence of Characteristics of Worker and Business on the Income of Informal Sector Workers in Yogyakarta

Populasi ◽  
2021 ◽  
Vol 29 (1) ◽  
pp. 77
Author(s):  
Jagad Hidayat Jati ◽  
Sri Rum Giyarsih ◽  
Luthfi Muta'ali
Keyword(s):  
Human Resources ◽  
Informal Sector ◽  
Low Income ◽  
Secondary Data ◽  
Binary Logistic Regression ◽  
Internet Technology ◽  
Gender And Age ◽  
Hours Of Work ◽  
Secondary Data Sources ◽  
Use Of Internet

Yogyakarta has excellent human resources, but informal sector workers are threatened with low income. This article aims to examine how the influence of worker and business characteristics on informal sector workers’ income in Yogyakarta. Characteristic of workers consist of education, work or business experience, status in the household, marital status, gender, and age. Then business characteristics consist of types of business fields, working days, hours of work, length of work, use of internet technology, and financial bookkeeping. The study was conducted quantitatively using secondary data sources obtained from the National Labor Force Survey (Sakernas) in August 2018. The data were analyzed using binary logistic regression. The findings show that both partially and simultaneously, each factor of the two characteristics has a significant influence on the income of informal sector workers in Yogyakarta.

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.

scholarly journals Wage Difference Between Formal Sector and Informal Sector Jobs; With Special Reference to the Labour Market in Sri Lanka

2021 ◽  
Vol 7 (3) ◽  
pp. 7-19
Author(s):  
Bharatha Prabath Parakrama Badullahewage ◽  
Shohani Upeksha Badullahewage
Keyword(s):  
Labour Market ◽  
Informal Sector ◽  
Wage Gap ◽  
Labour Force ◽  
Secondary Data ◽  
Equal Opportunities ◽  
Formal Sector ◽  
Dummy Variable ◽  
Basic Model ◽  
Formal And Informal Sectors

It is globally understood that wage-based employment structure and wages are a central aspects of the labour force at work. The informal sector is ranging to a broader concept that is difficult to define. The formal–informal wage gap is crucial to understand labour market informality, especially in developing countries with the large informal sectors. The basic model is taken from Mincer (1974), and the study is primarily based on secondary data. The new dummy variable of Job_type and an interactive term were incorporated into the Mincer earning function to analyse wage differences between formal sector and informal sector jobs. The study concludes that there is a wage gap between the a formal and informal sector. Moreover, if a person engages in formal sector job with good education qualification and good working experience, he will be entitled for a higher wage rate. Policies that promote education and equal opportunities for workers in both formal and informal sectors would improve earnings for many workers by increasing productivity and incomes.

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 Constraints to growth in informal sector activities and formalisation: A case study of Ghanaian slums

2018 ◽  
Vol 10 (1) ◽  
Author(s):  
Darma Mahadea ◽  
Luther-King Junior Zogli
Keyword(s):  
Informal Sector ◽  
Urban Areas ◽  
Principal Component ◽  
Well Being ◽  
Subjective Well Being ◽  
Formal Sector ◽  
Economic Activities ◽  
Policy Makers ◽  
Credit Access ◽  
Pca Method

Background: Globally, people often migrate from rural to urban areas in search of employment. Lack of adequate employment opportunities in cities forced individuals to engage in slum informal economic activities out of necessity.Aim: The informal sector presently employed about 86% of labour in Ghana, contributing 42% to its gross domestic product (GDP). Various constraints held back the development of slum informal activities. Formalising the informal sector is advocated as a step to generate employment. This article investigated the dynamics of informal sector activities and formalisation among slum operators in Ghana, based on a survey in two major cities there.Setting: This article investigated the constraints that hinder the development of slum activities in Accra and Kumasi, two cities in Ghana, and examined the informal operators’ subjective well-being and their willingness to graduate to the formal sector, should the constraints be addressed.Methods: Data were collected by means of a questionnaire, administered to a random sample of 342 informal slum operators. Enterprise constraints are examined by using the principal component analysis (PCA) method and the likelihood of the informal operators’ graduating to the formal sector by using logistic regression.Results: The PCA identified six clusters as limitations, explaining about 77% of the variation in constraints. These related to a lack of business knowledge, credit access, tools and materials, security and social networking. The logistic regression results reflect that, of all the constraints, it is only when access to capital is addressed, that slum operators will move into formal activities.Conclusion: When people are happy in what they are doing, they are reluctant to move to the formal sector, despite incentives or interventions that address their enterprise constraints. Hence, slum operators and informal activities are unlikely to disappear. Nevertheless, policy-makers have to devise appropriate financing strategies for slum operators to help in their formalisation and growth pathways.

scholarly journals Developments in the Informal and Formal Sector

2020 ◽  
Vol 1 (1) ◽  
pp. 20-22
Author(s):  
Simone Mingas ◽  
Nguenha Bastos
Keyword(s):  
Informal Sector ◽  
Rapid Development ◽  
Informal Institutions ◽  
External Factors ◽  
Wage Level ◽  
Formal Sector ◽  
Economic Activities ◽  
Political Issues ◽  
Political Actors ◽  
Two Sectors

The aims of the study to understand developments in the Informal and Formal Sector. This study discusses about the development of the informal and formal sectors a theoretical review of the informal and formal sectors, the concept of the informal sector the development of the informal and formal sectors. The informal and formal sectors have been running with their respective growth. The informal sector is a buffer against the transformation of unbalanced labor structures. Included as external factors are: First, that the institutions that support modern formal economic activities. Second, the wage level gap. Discrimination in the level of wages, both by informal institutions, the bureaucracy and the environment of formal economic actors themselves also perpetuates the separation of the two sectors. Third, related to technical-political issues, where political actors do not pay attention to and understand the rapid development of modernization.

scholarly journals Informal Employment in a Growing and Globalizing Low-Income Country

2015 ◽  
Vol 105 (5) ◽  
pp. 545-550 ◽  
Author(s):  
Brian McCaig ◽  
Nina Pavcnik
Keyword(s):  
Informal Sector ◽  
Low Income ◽  
Income Country ◽  
Informal Employment ◽  
Formal Sector ◽  
Birth Cohorts ◽  
Rural Workers ◽  
Low Income Country ◽  
Urban Workers ◽  
Younger Workers

We document several facts about workforce transitions from the informal to the formal sector in Vietnam, a fast growing, industrializing, and low-income country. First, younger workers, particularly migrants, are more likely to work in the formal sector and stay there permanently. Second, the decline in the aggregate share of informal employment occurs through changes between and within birth cohorts. Third, younger, educated, male, and urban workers are more likely to switch to the formal sector than other workers initially in the informal sector. Poorly educated, older, female, rural workers face little prospect of formalization. Fourth, formalization coincides with occupational upgrading.

scholarly journals Informal Sector in India: Migration and Poverty Implications

2020 ◽  
pp. 1-10
Author(s):  
Arup Mitra
Keyword(s):  
Informal Sector ◽  
Urban Poverty ◽  
Large Body ◽  
Urban Migration ◽  
Formal Sector ◽  
Rural And Urban ◽  
Welfare Losses ◽  
Business Contract ◽  
Informal Sector Employment

For assessing the role of urbanization in reducing poverty this paper based on secondary datatries to examine the nature of relationship among urbanisation, migration and informal sector employment. Findings suggest that the informal sector also tends to attract migrants as the probability to get work opportunities in this sector could be high. Further, rural and urban poverty are inter-connected as rural to urban migration and informal sector employment and other state-specific characteristics are associated, though migration and urbanisation with its spill-over effects reduce both rural and urban poverty. Also,based onthe survey data for unincorporated enterprises, the paper examinesif the unorganized or informal manufacturing, trade and services have the potentiality to grow and contribute to the realization of the inclusive growth objective. The inter-sectoral linkages do not necessarily mean that productivity and wages improve in the informal sector if the units manage to receive business contract from the formal sector enterprises. In fact, a large body of the informal sector is seen to be unconnected to the formal sector and this independent segment is on the rise over time. Finally the paper argues for the introduction of an informal sector policy which may help reduce the welfare losses to labour employed at the lower rungs.

Sign in / Sign up

Export Citation Format

Share Document