The Long Shadow of Informality: Challenges and Policies

Author/Contributor(s):	Ohnsorge, Franziska; Yu, Shu
Publisher:	World Bank Publications
Date:	03/01/2022
Binding:	Paperback
Condition:	NEW

A large percentage of workers and firms operate in the informal economy, outside the line of sight of governments in emerging markets and developing economies. Widespread informality may hold back the recovery in these economies from the deep recessions caused by the COVID-19 pandemic—unless governments adopt a broad set of policies to address the challenges of widespread informality. This study is the first comprehensive analysis of the extent of informality and its implications for a durable economic recovery and for long-term development. It finds that pervasive informality is associated with significantly weaker economic outcomes—including lower government resources to combat recessions, lower per capita incomes, greater poverty, less financial development, and weaker investment and productivity.