Entrepreneurship and the Informal Sector: Some Lessons from India

Abstract

This paper evaluates critically the popular structuralist representation that those operating in the informal sector are marginalized populations working as dependent employees out of economic necessity and in the absence of alternative means of livelihood. Reporting an empirical study of 1,518 informal workers in India, the finding is not only that a large proportion work on an own-account basis as informal entrepreneurs but also that not all work informally purely out of economic necessity and as a last resort. The paper concludes by calling for wider recognition that many operating in this sector are engaged in entrepreneurial endeavour and that not all are necessity-driven.

Keywords: entrepreneurship, India, informal economy, informal sector, shadow economy

JEL Classification: O17, K42, H26, H31, R20