Beyond Hierarchical Representations of the Formal/Informal Employment Dualism: Some Lessons from Ukraine

Abstract

This paper evaluates critically the conventional hierarchical representation of the formal/informal employment dualism, which depicts formal employment as extensive and positively contributing to economic development and social cohesion, and the separate realm of informal employment as weaker, inhabiting the margins and impairing progress and development. Although the discourses of informal employment as weak, marginal and separate from formal employment have been previously put under the spotlight, there has been little questioning of whether informal employment is a negative phenomenon. Through a study of Ukraine, however, this paper finds evidence that informal employment positively contributes to not only economic development as a seedbed for enterprise and entrepreneurship but also social cohesion as a primary vehicle for delivering community self-help. The outcome is a call for a finer-grained understanding of informal (and ultimately also formal) employment that recognises its plurality of forms and their varying consequences for economic development and social cohesion.

Keywords: informal economy, economic development, active citizenship, social cohesion, Ukraine

JEL Classification: H26, J46, K42, O17