Informalization of labour markets: Is formalization the answer?

By Martha Alter Chen on January 01, 2008

Abstract: This chapter considers what can and should be done about labour market informalization. It opens with a brief overview of informal labour markets in developing countries and labour market informalization in (mainly) developed countries, including gendered patterns and trends. The chapter then considers whether “formalization” is the answer to informalization, by considering what formalization should consist of for both the self-employed in informal enterprises and wage workers in informal jobs. Finally it outlines a broad approach to informal labour markets that goes beyond formalization per se, including reorienting economic policies, reforming the formal regulatory environment and empowering informal workers. In developed countries, relatively few labour statisticians, economists or other observers use the concepts of informal sector or informal employment. The last two decades have seen a marked increase in women’s labour force participation: most significantly in the Americas and Western Europe, and more modestly in sub-Saharan Africa, Southeast Asia and East Asia.

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