On Defining and Measuring the Informal Sector

A range of alternative empirical definitions of informal activity have been employed in the literature. Choice of definition is often dictated by data availability. Different definitions may imply very different conceptual understandings of informality. In this paper the authors investigate the degr...

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Main Authors:	Henley, Andrew, Arabsheibani, G. Reza, Carneiro, Francisco G.
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	CENTRAL AMERICAN COLLECTIVE BARGAINING COLLEGE GRADUATES COMPETITIVE PRESSURES CONDITIONS OF EMPLOYMENT DISABILITY DISMISSAL DISMISSALS DISPLACED WORKERS DISPLACEMENT DOMESTIC WORKERS ECONOMIC GROWTH EDUCATIONAL ATTAINMENT EMPLOYEE EMPLOYERS EMPLOYMENT CONTRACTS EMPLOYMENT RELATIONSHIP EMPLOYMENT STATUS ENTREPRENEURIAL ACTIVITY FIRING FIRING COSTS FIRM SIZE FLEXIBLE HOURS FLEXIBLE HOURS OF WORK FORMAL LABOR MARKET HOURS OF WORK HOUSEHOLD CHARACTERISTICS HOUSEHOLD INCOME HOUSEHOLD SURVEY HOUSEHOLD SURVEYS ILLEGAL EMPLOYMENT ILLITERACY INFORMAL EMPLOYMENT INFORMAL SECTOR JOB SATISFACTION JOBS LABOR CONTRACT LABOR MARKET LABOR MARKET REGULATION LABOR MARKET REGULATIONS LABOR REGULATION LEGAL STATUS LITERATURE MATERNITY LEAVE MINIMUM WAGE OCCUPATION OCCUPATIONAL CLASSIFICATION OCCUPATIONS OVERTIME PAPERS PREVIOUS STUDIES PRINCIPAL ALTERNATIVE PRIVATE SECTOR PROBIT REGRESSIONS PUBLIC SECTOR EMPLOYEES PUBLIC SECTOR EMPLOYMENT PUBLIC SECTOR WORKERS RESEARCHERS SELFEMPLOYMENT SENIORITY SOCIAL PROTECTION SOCIAL SECURITY STAFF TEMPORARY WORKERS TOTAL EMPLOYMENT TURNOVER UNEMPLOYMENT UNEMPLOYMENT RATES UNIONIZATION WAGE DIFFERENTIAL WORK IN PROGRESS WORKER WORKERS WORKING
Online Access:	http://documents.worldbank.org/curated/en/2006/03/6634942/defining-measuring-informal-sector http://hdl.handle.net/10986/8342

id	okr-10986-8342
recordtype	oai_dc
spelling	okr-10986-83422021-04-23T14:02:40Z On Defining and Measuring the Informal Sector Henley, Andrew Arabsheibani, G. Reza Carneiro, Francisco G. CENTRAL AMERICAN COLLECTIVE BARGAINING COLLEGE GRADUATES COMPETITIVE PRESSURES CONDITIONS OF EMPLOYMENT DISABILITY DISMISSAL DISMISSALS DISPLACED WORKERS DISPLACEMENT DOMESTIC WORKERS ECONOMIC GROWTH EDUCATIONAL ATTAINMENT EMPLOYEE EMPLOYERS EMPLOYMENT CONTRACTS EMPLOYMENT RELATIONSHIP EMPLOYMENT STATUS ENTREPRENEURIAL ACTIVITY FIRING FIRING COSTS FIRM SIZE FLEXIBLE HOURS FLEXIBLE HOURS OF WORK FORMAL LABOR MARKET HOURS OF WORK HOUSEHOLD CHARACTERISTICS HOUSEHOLD INCOME HOUSEHOLD SURVEY HOUSEHOLD SURVEYS ILLEGAL EMPLOYMENT ILLITERACY INFORMAL EMPLOYMENT INFORMAL SECTOR JOB SATISFACTION JOBS LABOR CONTRACT LABOR MARKET LABOR MARKET REGULATION LABOR MARKET REGULATIONS LABOR REGULATION LEGAL STATUS LITERATURE MATERNITY LEAVE MINIMUM WAGE OCCUPATION OCCUPATIONAL CLASSIFICATION OCCUPATIONS OVERTIME PAPERS PREVIOUS STUDIES PRINCIPAL ALTERNATIVE PRIVATE SECTOR PROBIT REGRESSIONS PUBLIC SECTOR EMPLOYEES PUBLIC SECTOR EMPLOYMENT PUBLIC SECTOR WORKERS RESEARCHERS SELFEMPLOYMENT SENIORITY SOCIAL PROTECTION SOCIAL SECURITY STAFF TEMPORARY WORKERS TOTAL EMPLOYMENT TURNOVER UNEMPLOYMENT UNEMPLOYMENT RATES UNIONIZATION WAGE DIFFERENTIAL WORK IN PROGRESS WORKER WORKERS WORKING A range of alternative empirical definitions of informal activity have been employed in the literature. Choice of definition is often dictated by data availability. Different definitions may imply very different conceptual understandings of informality. In this paper the authors investigate the degree of congruence between three definitions of informality based on employment contract registration, social security protection, and the characteristics of the employer and employment using Brazilian household survey data for the period 1992 to 2001. The authors present evidence showing that 64 percent of the economically active population are informal according to at least one definition, but only 40 percent are informal according to all three. Steady compositional changes have been taking place among informal workers, conditional on definition. The econometric analysis reveals that the conditional impact of particular factors (demographic, educational attainment, and family circumstances) on the likelihood of informality varies considerably from one definition to another. The results suggest growing heterogeneity within the informal sector. Therefore, the authors argue that informal activity may be as much associated with entrepreneurial dynamism as with any desire to avoid costly contract registration and social protection. However, the authors confirm there is no a priori reason for entrepreneurial activity to be unprotected. Consequently definitions of informality based on occupation and employer size seem the most arbitrary in practice even if conceptually well-founded. 2012-06-18T20:14:20Z 2012-06-18T20:14:20Z 2006-03 http://documents.worldbank.org/curated/en/2006/03/6634942/defining-measuring-informal-sector http://hdl.handle.net/10986/8342 English Policy Research Working Paper; No. 3866 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Brazil
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	CENTRAL AMERICAN COLLECTIVE BARGAINING COLLEGE GRADUATES COMPETITIVE PRESSURES CONDITIONS OF EMPLOYMENT DISABILITY DISMISSAL DISMISSALS DISPLACED WORKERS DISPLACEMENT DOMESTIC WORKERS ECONOMIC GROWTH EDUCATIONAL ATTAINMENT EMPLOYEE EMPLOYERS EMPLOYMENT CONTRACTS EMPLOYMENT RELATIONSHIP EMPLOYMENT STATUS ENTREPRENEURIAL ACTIVITY FIRING FIRING COSTS FIRM SIZE FLEXIBLE HOURS FLEXIBLE HOURS OF WORK FORMAL LABOR MARKET HOURS OF WORK HOUSEHOLD CHARACTERISTICS HOUSEHOLD INCOME HOUSEHOLD SURVEY HOUSEHOLD SURVEYS ILLEGAL EMPLOYMENT ILLITERACY INFORMAL EMPLOYMENT INFORMAL SECTOR JOB SATISFACTION JOBS LABOR CONTRACT LABOR MARKET LABOR MARKET REGULATION LABOR MARKET REGULATIONS LABOR REGULATION LEGAL STATUS LITERATURE MATERNITY LEAVE MINIMUM WAGE OCCUPATION OCCUPATIONAL CLASSIFICATION OCCUPATIONS OVERTIME PAPERS PREVIOUS STUDIES PRINCIPAL ALTERNATIVE PRIVATE SECTOR PROBIT REGRESSIONS PUBLIC SECTOR EMPLOYEES PUBLIC SECTOR EMPLOYMENT PUBLIC SECTOR WORKERS RESEARCHERS SELFEMPLOYMENT SENIORITY SOCIAL PROTECTION SOCIAL SECURITY STAFF TEMPORARY WORKERS TOTAL EMPLOYMENT TURNOVER UNEMPLOYMENT UNEMPLOYMENT RATES UNIONIZATION WAGE DIFFERENTIAL WORK IN PROGRESS WORKER WORKERS WORKING
spellingShingle	CENTRAL AMERICAN COLLECTIVE BARGAINING COLLEGE GRADUATES COMPETITIVE PRESSURES CONDITIONS OF EMPLOYMENT DISABILITY DISMISSAL DISMISSALS DISPLACED WORKERS DISPLACEMENT DOMESTIC WORKERS ECONOMIC GROWTH EDUCATIONAL ATTAINMENT EMPLOYEE EMPLOYERS EMPLOYMENT CONTRACTS EMPLOYMENT RELATIONSHIP EMPLOYMENT STATUS ENTREPRENEURIAL ACTIVITY FIRING FIRING COSTS FIRM SIZE FLEXIBLE HOURS FLEXIBLE HOURS OF WORK FORMAL LABOR MARKET HOURS OF WORK HOUSEHOLD CHARACTERISTICS HOUSEHOLD INCOME HOUSEHOLD SURVEY HOUSEHOLD SURVEYS ILLEGAL EMPLOYMENT ILLITERACY INFORMAL EMPLOYMENT INFORMAL SECTOR JOB SATISFACTION JOBS LABOR CONTRACT LABOR MARKET LABOR MARKET REGULATION LABOR MARKET REGULATIONS LABOR REGULATION LEGAL STATUS LITERATURE MATERNITY LEAVE MINIMUM WAGE OCCUPATION OCCUPATIONAL CLASSIFICATION OCCUPATIONS OVERTIME PAPERS PREVIOUS STUDIES PRINCIPAL ALTERNATIVE PRIVATE SECTOR PROBIT REGRESSIONS PUBLIC SECTOR EMPLOYEES PUBLIC SECTOR EMPLOYMENT PUBLIC SECTOR WORKERS RESEARCHERS SELFEMPLOYMENT SENIORITY SOCIAL PROTECTION SOCIAL SECURITY STAFF TEMPORARY WORKERS TOTAL EMPLOYMENT TURNOVER UNEMPLOYMENT UNEMPLOYMENT RATES UNIONIZATION WAGE DIFFERENTIAL WORK IN PROGRESS WORKER WORKERS WORKING Henley, Andrew Arabsheibani, G. Reza Carneiro, Francisco G. On Defining and Measuring the Informal Sector
geographic_facet	Latin America & Caribbean Brazil
relation	Policy Research Working Paper; No. 3866
description	A range of alternative empirical definitions of informal activity have been employed in the literature. Choice of definition is often dictated by data availability. Different definitions may imply very different conceptual understandings of informality. In this paper the authors investigate the degree of congruence between three definitions of informality based on employment contract registration, social security protection, and the characteristics of the employer and employment using Brazilian household survey data for the period 1992 to 2001. The authors present evidence showing that 64 percent of the economically active population are informal according to at least one definition, but only 40 percent are informal according to all three. Steady compositional changes have been taking place among informal workers, conditional on definition. The econometric analysis reveals that the conditional impact of particular factors (demographic, educational attainment, and family circumstances) on the likelihood of informality varies considerably from one definition to another. The results suggest growing heterogeneity within the informal sector. Therefore, the authors argue that informal activity may be as much associated with entrepreneurial dynamism as with any desire to avoid costly contract registration and social protection. However, the authors confirm there is no a priori reason for entrepreneurial activity to be unprotected. Consequently definitions of informality based on occupation and employer size seem the most arbitrary in practice even if conceptually well-founded.
format	Publications & Research :: Policy Research Working Paper
author	Henley, Andrew Arabsheibani, G. Reza Carneiro, Francisco G.
author_facet	Henley, Andrew Arabsheibani, G. Reza Carneiro, Francisco G.
author_sort	Henley, Andrew
title	On Defining and Measuring the Informal Sector
title_short	On Defining and Measuring the Informal Sector
title_full	On Defining and Measuring the Informal Sector
title_fullStr	On Defining and Measuring the Informal Sector
title_full_unstemmed	On Defining and Measuring the Informal Sector
title_sort	on defining and measuring the informal sector
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2006/03/6634942/defining-measuring-informal-sector http://hdl.handle.net/10986/8342
_version_	1764405818982137856

On Defining and Measuring the Informal Sector

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