Income inequality in Colombia has declined since the early 2000s but remains very high by international standards. Income dispersion largely originates from the labour market, which is characterised by a still high unemployment rate, a pervasive informal sector and a wide wage dispersion...

This paper empirically tests whether individual-level informality status is linked to a weak social contract, as measured through individual perceptions of its various aspects. Accounting for workers’ heterogeneity and a possible simultaneity between informality status and attitudes towards...

In this study, we investigate the relationship between the size of the informal economy and the level of environmental pollution/energy use. To this end, we first use different indicators of environmental pollution along with a measure of energy use intensity in a panel dataset consisting of 152...

Our paper investigates the size and development of the informal sector in Nepal using aggregate data over the period 1991 to 2009. Our estimation using the Multiple Indicator Multiple Cause (MIMIC) model shows that the average size of the informal sector has been about 44%. Nepal has been...

This paper examines the determinants of the decision of owners of small enterprises in Ghana to participate in the informal sector at start-up. For enterprises participating in the informal sector, the paper evaluates whether there are linkages with formal sector enterprises, and the...

This paper offers a new approach to measuring the size of the informal economy based on VAT data for the European Union. Although data intensive, our EVADE measure is simpler and more transparent than existing measures. EVADE also shows more variation across countries of Europe than earlier...

We study the dynamic general equilibrium effects of introducing a social pension program to elderly informal sector workers in developing countries who lack formal risk sharing mechanisms against income and longevity risks. To this end, we formulate a stochastic dynamic general equilibrium model...

The aim of this paper is to quantify the role of formal-sector institutions in shaping the demand for human capital and the level of informality. We propose a firm dynamics model where firms face capital market imperfections and costs of operating in the formal sector. Formal firms have a larger...

Firms operating on production linkages through vertical integration with other firms are generally expected to possess a secured market for their output and better accessibility to inputs. We test the hypothesis whether or not the informal firms operating on contracts with formal...