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Accepted Paper:
Measuring Informality: A State of the Field and Ways Forward
Max Gallien
(IDS)
The paper argues that conceptual innovations in how we understand informality have outpaced common measurements. It reviews the state of the field, highlights the biases that these measurements uphold, and explores suggested alternatives using data from a survey of informal workers in Accra.
Paper long abstract:
Much scholarship on informality and development begins with an observation of the huge size of informal economies, often citing widely available statistics from the ILO or from indirect modelled measurements such as Schneider (2010) or Elgin (2021). However, there are a range of well-established issues with these measurements: they are based on inconsistent data sources in different geographies, and rely on large assumptions. Furthermore, scholarship on informality in recent years has increasingly moved away from a dichotomous view of informality, highlighting multidimensionality and complex relationships between workers, firms and state structures. This paper takes stock of common measurements of informality and examines where the issues with dominant measurement are particularly impacting scholarship. It then examines alternative proposals, including an index approach, multidimensional and institution-specific approaches to measuring informality. It illustrates the implications of these approaches using novel data from a survey of informal workers in Accra collected by the ICTD, WIEGO and ISSER in 2022.