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1. Good Intentions, Better Outcomes: Shifting the Debate About Social Protection and Informality

Author:
James Heintz and Jayati Ghosh
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The introduction of social protections for individuals engaged in paid employment frequently comes up against arguments that such measures would have an adverse impact on employment, reduce access to formal jobs, and result in greater informality. The argument is that, while well intentioned, such policies distort labor markets and generate significant economic costs that either leave some workers worse off than they would have been in the absence of such protection, or the interventions become a drag on overall economic performance, encumbering the process of development. In what follows we critically evaluate such arguments and provide responses to the claim that social protections lead to higher informality. We also consider the challenges involved in providing social protection to different types of workers, including not only those employed by others but specifically the self-employed and unpaid workers.
Topic:
Economics, Employment, Labor Market, Informal Economy, and Protection
Political Geography:
Global Focus

2. IMF Standby Agreements and Inequality: The Role of Informality

Author:
Ceyhun Elgin and Adem Elveren
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
In this paper we investigate the response of two inequality metrics to different IMF programs. To this end, we use a relatively large annual (unbalanced) cross-country panel dataset that includes the Gini index and the Estimated Household Income Inequality as the two relevant inequality metrics and covers the period from 1950 to 2016 in an annual basis for 159 countries. Our empirical analysis indicates that in countries where the informal sector size (as percentage of GDP) is relatively larger, the extent of income inequality increases after different IMF programs, but particularly so after standby arrangements. However, we also show that the opposite is true, when informal sector size is small, i.e., inequality declines after different IMF programs.
Topic:
Political Economy, Inequality, IMF, and Informal Economy
Political Geography:
Global Focus

3. COVID-19 and the Informal Sector: What it means for women now and in the future

Author:
Turkan Mukhtarova
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Georgetown Institute for Women, Peace and Security (GIWPS)
Abstract:
Approximately five months into the global COVID-19 crisis, the short- and long-term damage to national economies—especially in the developing world—continues to be felt disproportionately by poor women. Initial analysis of data from countries including Brazil, India, Russia, and Kenya suggests women workers are particularly vulnerable to the current economic crisis because national lockdowns have brought the informal sector to a halt. Informal sector workers are those with no written contracts, paid leave, health benefits, or social security. Women outnumber men in the informal sector in a majority of least developed economies, and as a result, more women have found themselves out of work during the pandemic. This policy brief explores common problems facing informal women workers such as seasonal farm laborers and street vendors due to COVID-19. It also suggests policies for mitigating the economic damage to their livelihoods, including cash transfers, suspension of debts, and protections from eviction.
Topic:
Women, COVID-19, Economic Security, and Informal Economy
Political Geography:
Global Focus

4. International Business Cycles: Information Matters

Author:
Eleni Iliopulos, Erica Perego, and Thepthida Sopraseuth
Publication Date:
02-2019
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
We study the international transmission of shocks when agents form expectations under adaptive learning and imperfect information. To this aim we consider a two-country model featuring financial frictions, nominal rigidities, learning and Home information bias (as a source of information imperfection). We show that the more pronounced the Home information bias, the less agents track the international transmission of shocks, as it would otherwise be the case under rational expectations. The model succeeds in matching the low business cycle synchronization of consumption, while generating a positive output co-movement. In doing so, the model takes the theory closer to the data with respect to the output-consumption co-movement anomaly. The model also exhibits departure from the Uncovered Interest rate Parity.
Topic:
Economics, International Political Economy, International Business, Information Technology, and Informal Economy
Political Geography:
Global Focus