Analysis of the concept of informal economy through 102 definitions: legality or necessity

Abstract

The processes of informal economy are well established, but the same cannot be said of their conceptual treatment in the academic literature. They constitute complex phenomena that cut across sectors and disciplines and give rise to other elements that simultaneously reject and encourage them. For many formal stakeholders in the economy, they are an enemy to be beaten; for the authorities, informal activity is seen as a loss of revenue for the state coffers; for the Sustainable Development Goals, by implicitly recognizing them in goal 8, they constitute a paradigm shift.  Meanwhile, the reality for those involved in the informal economy is that it is a way of life and not a mere choice, one that leads to the most social of all economies: that of necessity. There is no consensus among academics on informality and its ramifications, hence the need to analyze the processes of informal economy from its theoretical construction with the purpose of discovering its range and depth, as well as its interrelationships and theoretical implications. To achieve this, 102 definitions of informal economy were analyzed by identifying and deconstructing their dimensions and performing a frequency count of their citation in Google Scholar. This analysis demonstrated the lack of cultural elements in the definitions, which are the true underlying cause of the phenomenon, and the over-prominence afforded to legal dimensions.

Plain language summary

People have to find many different ways to earn a living in order to meet the needs of their families.  Some of these modes of employment, the so-called informal economy, clash directly with the wishes of governments and organizations who do not recognize that decent paid work may take many forms or do not understand that there are often no alternatives. This confused picture of contradictory opinions requires some clarity, which was the aim of this study in its analysis of the definition of informal economy by 102 experts. The analysis sought to reveal the meaning of this concept that is fundamental to life in society, especially in countries suffering from environmental challenges, political crises, or the scourge of corruption. The findings demonstrate the lack of cultural considerations in the academic study of this complex phenomenon, despite their inherent importance. If progress is to be made in improving working conditions, greater understanding is needed of how the most basic needs affect the way society functions.