Inequality and informality in transition and emerging countries

Abstract

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Is informality a barrier to sustainable development?

“…Another set of studies has focused on the effects of the informal economy on income distribution. There are several channels through which informalization of the labor market might affect income inequality (Dell'Anno, 2016; Mishra & Ray, 2010; Schneider & Enste, 2000); conversely, income equality can affect the size of the informal sector (Elgin & Elveren, 2019). It has often been argued that the presence of the informal sector improves income distribution by providing employment opportunities to low‐skilled or unskilled workers and thus furnishing income to the poor and excluded groups.…”

Oil price shocks, protest, and the shadow economy: Is there a mitigation effect?

“…In the context of developing countries, a shadow economy helps to maintain economic activities when rent seeking and corruption increase the cost of doing business in the formal sector (Eilat & Zinnes, 2002). A shadow economy may also increase financial resources and help to accumulate entrepreneurial experience for the disadvantaged (Dell'Anno, 2016). The positive effect of the shadow economy on the formal economy may manifest itself in higher opportunity costs of conflict.…”

“…Firms in the shadow economy are also forced to operate suboptimally with limited ownership structures. Such firms are exposed to a higher risk of extortion and public corruption, given their unregistered nature and lack of legal support by public institutions (Dell’Anno, 2016). Moreover, Biswas et al, (2012) show that a shadow economy negatively affects the quality of the business environment, which combined with the “dual” view may predict greater dissatisfaction with the political system.…”

Confianza y gobierno abierto en américa latina

“…People who were outside the legal system and who would like to work in a legal system that supports them, that they can integrate. But it hasn't been designed yet" (de Soto, 2011).…”