Sociology Index

INFORMAL ECONOMY

The informal economy or grey economy comes from informal sector of the economy. Informal economy is also known as the underground economy, or the hidden economy. Informal economy is the part of an economy that is neither taxed nor monitored by any form of government. Informal economy refers to those economic activities which are carried on outside the institutionalized structures of the economy.

Informal economy means they are transactions not reported to the various departments. Informal economy transactions are based on cash exchanges but they may be bartered for goods or services.

Informal economy activities are always performed in a way as to avoid being identified. Informal economy is based on family and community and may not expect a quick financial return.

Although the informal sector makes up a significant portion of the economies in developing countries, it is often stigmatized as troublesome and unmanageable. The informal economy sector provides critical economic opportunities for the poor.

Informal economy would include local barter, self-help networks and other activities such as light construction and repair work. Informal activity is not easy to investigate and monitor.

Integrating the informal economy into the formal economy is an important policy challenge. The activities of the informal economy are not included in a country's gross national product or gross domestic product. Other concepts that can be characterized as informal economy sector can include the black market, and agorism. Associated informal economy idioms include "under the table", "off the books", and "working for cash".

The informal economy comprises half to three quarters of the non-agricultural labour force in developing countries. The informal economy can play a significant role in the global economy and in reducing poverty and inequality. The informal economy is economic activities, jobs, and workers that are not regulated or protected by the state. The concept of informal economy originally applied to self-employment in small unregistered enterprises. The concept of informal economy has been expanded to include wage employment in unprotected jobs.