Informality in Latin America and the Caribbean

This paper studies the causes and consequences of informality and applies the analysis to countries in Latin America and the Caribbean. It starts with a discussion on the definition and measures of informality, as well as on the reasons why widesp...

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Bibliographic Details
Main Authors:	Loayza, Norman V., Servén, Luis, Sugawara, Naotaka
Format:	Policy Research Working Paper
Language:	English
Published:	Washington, DC: World Bank 2012
Subjects:	ABUSE ACCOUNTING ADULT POPULATION ADVERSE EFFECT AGRICULTURE BANK POLICY BENCHMARK CONSUMER GOODS CONSUMPTION EXPENDITURE CONTRACT ENFORCEMENT CORRELATION ANALYSIS COUNTRY RISK CREDIT INSTITUTIONS CREDIT PROVISION CURRENCY DEMOGRAPHIC FACTORS DEMOGRAPHIC PRESSURES DEMOGRAPHIC TRANSITION DEMOGRAPHIC TRENDS DEVELOPING COUNTRIES DEVELOPMENT POLICIES DRUGS DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC FREEDOM ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMICS EDUCATIONAL ATTAINMENT EDUCATIONAL LEVEL EMPLOYMENT EMPLOYMENT TRENDS ENFORCEMENT POWER EXCHANGE CONTROLS EXCHANGE RATE FINANCIAL INSTITUTIONS GDP GDP PER CAPITA GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES IMPORTANT POLICY INCIDENCE OF POVERTY INCOME INCOME DISTRIBUTION INCOME INEQUALITY INFORMAL ECONOMIES INFORMAL ECONOMY INFORMAL EMPLOYMENT INFORMAL SECTOR INSTRUMENT INTELLECTUAL PROPERTY INTERNATIONAL BANK INTERNATIONAL LABOR ORGANIZATION INTERNATIONAL MARKETS JUDICIAL SYSTEM LABOR FORCE LABOR MARKETS LABOR ORGANIZATION LABOR PRODUCTIVITY LABOR REGULATIONS LABOUR LABOUR MARKET LEGAL PROTECTION LEGAL SYSTEM LESS DEVELOPED COUNTRIES LEVEL OF EDUCATION LEVELS OF EDUCATION LOAN LOAN APPLICATIONS LOCAL CURRENCY MACROECONOMICS MARKET ECONOMY MARKET INDEX NEGATIVE EXTERNALITY NPL PENSION POLICY RESEARCH POLICY RESEARCH WORKING PAPER POPULATION DIVISION POVERTY ALLEVIATION PRICE CONTROLS PRIVATE CAPITAL PRODUCTIVITY GROWTH PROGRESS PUBLIC POLICY PUBLIC SERVICES REAL GDP REAL WAGE REGIONAL DUMMY REGRESSION ANALYSIS REGULATORY AUTHORITIES REGULATORY FRAMEWORK REGULATORY FRAMEWORKS REGULATORY REGIME RESPECT RETIREMENT RETURNS RISK DIVERSIFICATION RURAL POPULATION RURAL POPULATIONS SECONDARY SCHOOLING SELF EMPLOYED SELF EMPLOYED WORKERS SELF EMPLOYMENT SKILLED LABOR TAX TAX REVENUES TAXATION TELECOMMUNICATIONS TOTAL EMPLOYMENT TOTAL LABOR FORCE TRANSPORTATION UNEMPLOYMENT USE OF RESOURCES WORKERS WORLD POPULATION YOUNG PEOPLE
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090330131803 http://hdl.handle.net/10986/4083

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Summary:	This paper studies the causes and consequences of informality and applies the analysis to countries in Latin America and the Caribbean. It starts with a discussion on the definition and measures of informality, as well as on the reasons why widespread informality should be of great concern. The paper analyzes informality's main determinants, arguing that informality is not single-caused but results from the combination of poor public services, a burdensome regulatory regime, and weak monitoring and enforcement capacity by the state. This combination is especially explosive when the country suffers from low educational achievement and features demographic pressures and primary production structures. Using cross-country regression analysis, the paper evaluates the empirical relevance of each determinant of informality. It then applies the estimated relationships to most countries in Latin America and the Caribbean in order to assess the country-specific relevance of each proposed mechanism.

Informality in Latin America and the Caribbean

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