Informal Economy
An Informal Economy is an economy that is not monitored by a government.
- AKA: Undeclared Sector.
- …
- Example(s):
- an Illegal Drug Economy.
- …
- Counter-Example(s):
- See: Under The Table, Grey Market, Black Market, Cash Transaction.
References
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/informal_sector Retrieved:2015-5-30.
- The informal sector, informal economy, or grey economy is the part of an economy that is neither taxed, nor monitored by any form of government. Unlike the formal economy, activities that are engaged in the informal economy are not included in the gross national product (GNP) and gross domestic product (GDP) of a country. The informal sector can be described as a grey market in labour.
Other terms used to refer to the informal sector can include the black market, the shadow economy, the underground economy, the agora, and System D. Associated idioms include “under the table", "off the books" and "working for cash".
Although the informal sector makes up a significant portion of the economies in developing countries – about 41% in 2000 according to the official GNI metric – it is often stigmatized as troublesome and unmanageable. However the informal sector provides critical economy opportunities for the poor and has been expanding rapidly since the 1960s. As such, integrating the informal economy into the formal sector is an important policy challenge.
- The informal sector, informal economy, or grey economy is the part of an economy that is neither taxed, nor monitored by any form of government. Unlike the formal economy, activities that are engaged in the informal economy are not included in the gross national product (GNP) and gross domestic product (GDP) of a country. The informal sector can be described as a grey market in labour.
2014
- http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALPROTECTION/EXTLM/0,,contentMDK:20224904~menuPK:584866~pagePK:148956~piPK:216618~theSitePK:390615,00.html
- QUOTE: The informal economy refers to activities and income that are partially or fully outside government regulation, taxation, and observation. The main attraction of the undeclared economy is financial. This type of activity allows employers, paid employees, and the self-employed to increase their take-home earnings or reduce their costs by evading taxation and social contributions. On the one hand, informal employment can provide a cushion for workers who cannot find a job in the formal sector. But, on the other hand, it entails a loss in budget revenues by reducing taxes and social security contributions paid and therefore the availability of funds to improve infrastructure and other public goods and services. It invariably leads to a high tax burden on registered labor.
A high level of informality also can undermine the rule of law and governance. The fact that a large share of the population is openly ignoring laws, regulations and taxes can weaken the respect citizens have for the state.
- QUOTE: The informal economy refers to activities and income that are partially or fully outside government regulation, taxation, and observation. The main attraction of the undeclared economy is financial. This type of activity allows employers, paid employees, and the self-employed to increase their take-home earnings or reduce their costs by evading taxation and social contributions. On the one hand, informal employment can provide a cushion for workers who cannot find a job in the formal sector. But, on the other hand, it entails a loss in budget revenues by reducing taxes and social security contributions paid and therefore the availability of funds to improve infrastructure and other public goods and services. It invariably leads to a high tax burden on registered labor.