Informal Economy

The informal economy refers to economic activities that operate outside formal regulation, taxation, and official recording, including street vending, domestic work, casual labor, home-based production, unlicensed services, and many forms of unpaid or cash-in-hand work. The concept was popularized by the anthropologist Keith Hart in his study of urban Ghana and developed by the International Labour Organization, which highlighted the large scale of such work in developing countries. Hernando de Soto argued that legal barriers keep entrepreneurs informal, while Alejandro Portes and Manuel Castells examined how informality is integral to capitalist accumulation, linking formal firms with flexible, low-cost labor. Saskia Sassen showed its presence in global cities of the wealthy North, and Ray Pahl studied household work strategies in Britain. Feminist scholars such as Martha Chen have highlighted the large share of women in informal employment and its lack of social protection. Informal workers often face insecurity, low pay, and exclusion from rights, yet informality also provides livelihoods and flexibility. Debates concern whether it represents a survival strategy, a form of resistance to regulation, or an outcome of global economic restructuring.