Informal Normal: Research Directions on the Informal Economy

The informal economy is where most of the income-poor and vulnerable can be found. 

If you are concerned about development, then you realise you need to consider informal economy realities in the era of globalisation. Contemporary research will border on informal employment, informal work, informal finance, informal networks, as well as the impact of ICTs on the mode and nature of informal economy activities in developing country environments. Such studies use a combination of literature surveys, quantitative and qualitative research methods to present an analysis of the informal economy in global change and crisis. In my forthcoming piece, some of these issues are addressed.

The introduction provides a conceptual background on informality and how the body of literature on informal economy has emerged since Hart’s coining of the term.  Set within our contemporary times, it also provides an overview of the effects of a shrinking global population, job losses on the informal economy across developing countries.

Given the uncertainties of the global economy, shrinking production and the risks of job losses, coupled with the leverage that technological advancements afford, there has arisen the phenomenon of multiple engagements by members of the formal labour market. I present a review of theory and evidence on the determinants of an hybrid employment status using a Nigerian sample.

A question arises: why do traditional networks for savings and credit still exist, in a globalised world with advances in financial service provision and emergence of Fintech firms? It is pertinent to understand why such traditional cooperative networks for informal financing still exist within formal and informal human organisations. The survey evidence presented here interrogates the likely motivation for hybrid financing options.  

Existing literature hints that informal economy workers tend to work longer hours, in precarious circumstances and with minimal time allocated to rest. I provide a literature survey and share evidence from a sample time use survey of selected informal sector operators. In doing this, I explore the nature of work and time use in the informal economy and the myriad implications for health and safety.

Consumption expenditure is the largest and most important component of aggregate demand. At the micro level, household purchasing decisions for a variety of goods and services are made within the constraints of income and time. It will be interesting to explore the role of formal and informal household purchasing especially during periods characterised by general price instability and credit crunch.

With the emergence of a ‘gig economy’ alongside the informal economy, there is a need to investigate how usage of ICTs, growth of social networks and Fintech firms are changing the mode and structure of operations in informal sector enterprises within the context of a developing country environment.

   

More literature and sample surveys need to document the decent work deficits in informal employment and indicate occupational hazards associated with informal work in manufacturing, trade and services. In addition, empirical studies that highlight the impact of informal sector activities on environmental pollution are needful. I am looking to examining policy options and social actions to effectively curtail environmentally harmful behaviours such as littering.

A global pandemic, such as the COVID-19, may impact on the structure and likely growth pattern of the informal economy. Developing countries need to build resilience against global health shocks which could result in a complete lockdown of communities and activities in the informal economy. I argue that social protection schemes such as micro-insurance and unemployment insurance for informal sector operators are worthy of social policy consideration.

What do you think?

Please feel free to share your thoughts in the comments section below. Thank you!