- October 1, 2022
- Posted by: Stratford Team
- Category: Economy
Informal economic activity is widespread around the world. On average, such activity accounts for about one-third of output, and informal employment captures almost one-third of total employment (Figure 1). It undermines revenue collections, stunts productivity, hinders investment, and traps some of the most vulnerable workers in low-paying, unproductive employment. For policymakers in countries with widespread informality, it is a formidable challenge.
Figure 1. Informality around the world
Sources: Elgin et al. (2021).
Note: Bars are simple averages. “EMDEs” stands for emerging marking and developing economies. Informal output is proxied by dynamic general equilibrium (DGE) model-based estimates in percent of official GDP. Self-employment, a common proxy for informal employment, is in percent of total employment. World averages between 1990-2018 are in orange.
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