Beyond the Formal Economy: Evaluating the Level of Employment in Informal Sector Enterprises in Global Perspective

Journal of Developmental Entrepreneurship, Vol. 18, No. 4 (2013)

21 Pages Posted: 22 Dec 2015

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Date Written: 2013

Abstract

The aim of this paper is to evaluate the varying level of employment in informal sector enterprises across the globe and to undertake an exploratory analysis of the wider economic and social conditions associated with greater levels of informalization. Examining International Labor Organization surveys conducted in 43 countries, the finding is that the main job of just under one in three (31.5 percent) non-agricultural workers is in an informal sector enterprise. Conducting an exploratory analysis of the correlation between countries with higher levels of employment in informal sector enterprises and economic under-development (‘modernization’ thesis), higher taxes, corruption and state interference (‘neo-liberal’ thesis) and inadequate state intervention to protect workers from poverty (‘structuralist’ thesis), the finding is that there is a need to synthesize various tenets from all three perspectives. The outcome is a tentative call for a ‘neo-modernization’ perspective, which posits that higher levels of employment in informal sector enterprises are associated with economic under-development, public sector corruption and inadequate state intervention to protect workers from poverty.

Keywords: Informal economy, shadow economy, underground sector, entrepreneurship, enterprise development, economic development

JEL Classification: H26, J46, K42, O17

Suggested Citation

Williams, Colin, Beyond the Formal Economy: Evaluating the Level of Employment in Informal Sector Enterprises in Global Perspective (2013). Journal of Developmental Entrepreneurship, Vol. 18, No. 4 (2013), Available at SSRN: https://ssrn.com/abstract=2706633

Colin Williams (Contact Author)

University of Sheffield - School of Management ( email )

15 Conduit Road
Sheffield, S10 1FL
United Kingdom

HOME PAGE: http://https://www.sheffield.ac.uk/management/staff/williams/index

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