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When seeking to increase their tax revenues, policy makers face a likely tradeoff between decreasing personal income tax rates (making formalizing more attractive and potentially contributing to revenue) and alternatively raising tax rates (potentially slowing down the formalization of the economy if people prefer informal employment). Evidence on formal versus informal earnings and job characteristics in different sectors is limited in African countries, and in particular very little is known about the impact of tax changes on the extent of informality. This paper therefore estimates the personal income tax responsiveness of the extensive margin of formality, i.e. the propensity to be a formal as opposed to an informal worker, for Ghana, Rwanda, Tanzania, and Uganda, using repeated cross-sections of household data and applying grouping estimator techniques. Perhaps because of labour demand constraints and other frictions, the paper finds non-significant relations between the formal employment share and the formal-informal earnings differences. [ABSTRACT FROM AUTHOR]

Based on a combination of detailed survey data and in-depth interviews with informal workers in the construction, micro-trade, and transport sectors in urban areas of Kenya and Tanzania, this article explores the extent to which informal worker associations facilitate member access to formal social insurance schemes. The article provides unique insight into what characterises informal workers, and the circumstances under which associations may ensure social protection for their members. The analysis shows that members of informal worker associations are significantly more likely to participate in formal insurance schemes compared with non-members, albeit with some variation across location, sector, and worker types. These divergences relate partly to sector-specific and institutional constellations, as well as the ways in which informal worker associations function. Moreover, the article shows that informal worker associations often play a dual role by providing both direct short-term social cushioning and enabling enrolment in formal social insurance schemes. Their part in ensuring the achievement of universal social protection must therefore not be underestimated. [ABSTRACT FROM AUTHOR]

The triangle of dairy intensification, commercialisation and market formalisation is promoted to address the challenges of food and nutrition security (FNS) and climate change. This article questions the need for formalisation to reach intensification and commercialisation objectives in Kenya. Moving beyond the binary perception of milk markets as either 'formal' or 'informal', we investigate a repertoire of milk-collection practices and address the following question: 'What enables diverse intermediary practices to ensure a consistent flow of milk from grass to glass?' Sampling, data collection and analysis were guided by a qualitative research design for an empirical exploration of the practices of owner-operated (N = 13) and corporate (N = 4) milk collectors. Iterative analysis of observations revealed three main themes constituting milk-collection practices: (1) buying milk, (2) managing milk (quantity and quality measurement) and (3) selling milk to the next buyer. These practices were enabled and sustained by the diverse options available for each aspect of milk collection, and by the capacity of collectors to accommodate variety in their practices. We invite scholars and practitioners to conduct deeper explorations of how to accommodate events in practice to enhance the success of ambitions relating to FNS and climate change through pathways of intensification and commercialisation. [ABSTRACT FROM AUTHOR]

How does informal economic activity respond to increased financial inclusion? Does it become more entrepreneurial? Does access to new financing options change the gender configuration of informal economic activity and, if so, in what ways and what directions? We take advantage of nationwide data collected in 2010/11 and 2015/16 by India's National Sample Survey Office on unorganized (informal) enterprises. This period was one of rapid expansion of banking availability aimed particularly at the unbanked, under-banked, and women. We find strong empirical evidence supporting the crucial role of financial access in promoting entrepreneurship among informal sector firms in India. Our results are robust to alternative specifications and alternative measures of financial constraints using an approach combining propensity score matching and difference-in-differences. However, we do not find conclusive evidence that increased financial inclusion leads to a higher likelihood of women becoming entrepreneurs than men in the informal sector. [ABSTRACT FROM AUTHOR]

Using a special module of the 2015 Mexican Labour Force Survey with information on workers' preferences for jobs with social security coverage, it is found that 80 per cent of informal workers in large urban areas would prefer to work in a job that provides them with such coverage. The estimation of a discrete choice econometric model which distinguishes between wanting a formal job and the probability of getting one shows that schooling increases the chances of being hired in formal employment and of having higher earnings in it. Women with greater responsibilities at home are less likely to want formal employment, and they also face a lower probability of being hired in such jobs. The findings indicate the segmentation of Mexican labour markets and the rationing of formal jobs, together with the existence of workers who voluntarily participate in informal employment. However, the estimated fraction of involuntary informal workers is quite high. [ABSTRACT FROM AUTHOR]

This paper considers two vertical links between informal and formal sector firms and studies their implications. First, we model a situation where final products produced by the formal and informal sector firms are differentiated in terms of quality and consumption demand for the informal sector firm is related to the distribution of income. Less well-off consumers generate demand for the low-priced, low quality good produced by the informal sector. Our paper studies the implications of this link for the size of the informal sector. Second, we analyse a situation where, instead of competing with the formal sector firm, the informal sector firm produces an intermediate good for the other firm. [ABSTRACT FROM AUTHOR]

We document job characteristics for young, male, urban workers in Mexico, a country with high informal employment and increasing education levels. The informal sector is composed of two distinct parts: salaried informal employment and self-employment. On almost every measure, including wages, informal salaried jobs are of lower quality than formal salaried or self-employed ones. We characterize short-term job type transitions among these workers and show that education plays a key role when transitioning into the formal sector, whereas age is more strongly associated with transitions into self-employment. Persistence in and transitions into formal jobs are more likely for more educated workers. These workers also benefit from higher wage gains when this transition is from informal salaried jobs. On average, wages are higher for workers transitioning into self-employment, but less-educated workers benefit more. For these workers, self-employment can represent an outlet for entrepreneurial talent for some, but like informal salaried work, for others, it can be the sector of last resort. [ABSTRACT FROM AUTHOR]

Microfinance is seen as an important vehicle for developing small businesses in developing and transitional economies despite the relative absence of supporting research. We use mixed methods to offer a nuanced empirical exploration of the relationship between microfinance and everyday entrepreneurial practice(s) in Kazakhstan. As in many transitional contexts, 'unbankable' borrowers here operate in a vibrant informal sector, face high degrees of uncertainty, and retain a strong distrust of a corrupt/predatory state. Our data-based methodology for analysing borrowers' diverse relationships with microfinance organisations (MFOs) generates insights into their multiple pathways to business development. Both 'outreac\h' and 'commercialised' MFOs sustain micro-flows of resources that are critical for everyday entrepreneurs who need to finance ongoing consumption and contingencies whilst also (and by) building up their small businesses. Microfinance use did not promote formalisation or impersonalised banking relationships. Instead, MFOs focused primarily on repayment, clients' businesses remained partially formalised or unregistered across all stages of growth and the lending relationships preferred by Private MFOs and borrowers were highly personalised. Consequently, we call for assumptions about how microfinance can (and should) drive small business development need to be rethought for transitional contexts. [ABSTRACT FROM AUTHOR]

What drives tax compliance among informal workers, and how does compliance affect their policy preferences? Informal workers in developing countries encounter multiple taxes levied by government authorities and non-state actors. Using an original survey of approximately 800 informal workers in Lusaka, Zambia, this paper shows that compliance is tied to the governance setting where workers operate. In cooperative markets, compliance is higher where services are better and where trust in market leaders is stronger. Yet, in markets overseen by the city council, revenue collection capacity is more relevant. This suggests that the drivers of compliance can vary depending on the routes of accountability between tax payers, revenue collectors, and service providers. A vote choice experiment further reveals that regardless of market type, those who pay taxes are more likely to favour a politician interested in improving market services rather than one campaigning to improve the city's schools and health clinics. The results suggest that even within the informal sector, the process of paying taxes affects policy preferences and shapes citizens' preferences for elected leaders who espouse a platform most congruent with their own priorities. [ABSTRACT FROM AUTHOR]