Authors: Oviedo, Ana Maria; Thomas, Mark R.; Karakurum-Özdemir, Kamer
Publication date: June 2009
This survey assembles recent theoretical and empirical advances in the literature on economic informality and analyzes the causes and costs of informality in developed and developing economies. Using recent evidence, the survey discusses the nature and roots of informal economic activity
across countries, distinguishing between informality as the result of “exclusion” and “exit.” The survey provides an extensive review of recent international experience with policies aimed at reducing informality, in particular, policies that facilitate the formalization
process, create a framework for the transition from informality to formality, lend support to newly created firms, reduce or eliminate inconsistencies across regulation and government agencies, increase information flows, and increase enforcement.