fbpx The Informal Economy: Is Formalization the Answer? | Harvard Kennedy School
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Martha Chen

Lecturer in Public Policy

Since its "discovery" in the early 1970s, the informal economy has attracted much interest and debate. Despite early predictions to the contrary, the informal economy has continued to grow, appearing in new guises and new places. Today, at least half of the workforce in most developing countries -- as much as 90% of the workforce in some countries -- is informally employed. Many of the workers in today's global production system are informally employed. Given these trends, there is renewed interest in -- and rethinking of -- the informal economy. The course begins with an overview of the historical debates, recent rethinking, and current evidence on the informal economy, including its size, composition, causes, and consequences. Special attention is given to the conditions and perspectives of the working poor in the informal economy, especially in the context of the recent economic crisis and current modernization of cities. The course focuses on alternative policy and programmatic responses to the informal economy, from regulating and taxing informal enterprises to promoting the productivity, rights, and protection of informal workers.