Informal Labour and Credit Markets: A Survey

42 Pages Posted: 2 Mar 2010

See all articles by Nicoletta Batini

Nicoletta Batini

International Monetary Fund (IMF)

Paul Levine

School of Economics, University of Surrey

Young-Bae Kim

University of Surrey

Emanuela Lotti

University of Surrey - Department of Economics

Date Written: February 2010

Abstract

This paper reviews the literature on the informal economy, focusing first on empirical findings and then on existing approaches to modeling informality within both partial and general equilibrium environments. We concentrate on labour and credit markets, since these tend to be most affected by informality. The phenomenon is particularly important in emerging and other developing economies, given their high degrees of informal labour and financial services and the implications these have for the effectiveness of macroeconomic policy. We emphasize the need for dynamic general equilibrium (DGE) and ultimately dynamic stochastic general equilibrium (DSGE) models for a full understanding of the costs, benefits and policy implications of informality. The survey shows that the literature on informality is quite patchy, and that there are several unexplored areas left for research.

Keywords: Access to capital markets, Credit, Developing countries, Economic models, Emerging markets, Labor markets, Monetary policy, Private sector

Suggested Citation

Batini, Nicoletta and Levine, Paul L. and Kim, Young-Bae and Lotti, Emanuela, Informal Labour and Credit Markets: A Survey (February 2010). IMF Working Papers, Vol. , pp. 1-41, 2010. Available at SSRN: https://ssrn.com/abstract=1562410

Nicoletta Batini

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Paul L. Levine

School of Economics, University of Surrey ( email )

Guildford
Surrey GU2 7XH
United Kingdom
+44 1483 259 380 Ext. 2773 (Phone)
+44 1483 259 548 (Fax)

Young-Bae Kim

University of Surrey ( email )

Guildford
Guildford, Surrey GU2 5XH
United Kingdom

Emanuela Lotti

University of Surrey - Department of Economics ( email )

Guildford
Surrey GU2 7XH
United Kingdom

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