Preface

Abstract

Informality and informal employment are widespread and growing phenomena in all regions of the world, in particular in low and middle income economies. A large part of economic activity in these countries is not registered or under-declared and many workers enter employment relationships that do not provide any or only partial protection. Causes and consequences of informality in these regions have recently received growing attention, with a particular emphasis on the role of institutions. Several competing paradigms about informality and informal employment exist in the literature. The traditional dualistic view sees the informal segment as the inferior sector, the option of last resort. Due to barriers to entry, minimum wages, unions or other sources of segmentation, formal jobs are rationed. Workers in the informal sector are crowded out from the formal sector involuntarily, their wage being less than that in the formal sector. In contrast, the competitive view sees the formal and informal labor markets not segmented, but integrated. Voluntary choice regarding jobs and particular attributes of these jobs, such as flexible hours, working as a self-employed and being one's own boss as a micro-entrepreneur, and not valuing social security benefits, can be the reasons for remaining in or moving to the informal sector. A third paradigm points to segmentation within the informal sector. Embedding theoretical and empirical analysis of informality and informal employment in low and middle-income countries into the literature helps us to better characterize the labor markets in these countries.

Citation

Lehmann, H. and Tatsiramos, K. (2012), "Preface", Lehmann, H. and Tatsiramos, K. (Ed.) Informal Employment in Emerging and Transition Economies (Research in Labor Economics, Vol. 34), Emerald Group Publishing Limited, Leeds, pp. xi-xv. https://doi.org/10.1108/S0147-9121(2012)0000034003