"Informality" and globalization
Standard theories of development have been predicated on the goal of an industrialized economy with the potential for full and regularized employment. Such a view necessitates a host of statistical categories to define and measure labor markets. In a 2000 paper, PAUL E. BANGASSER writes an institutional history of the International Labor Organization's (ILO) evolving attempts to understand and quantify the category of the "informal sector"—by now a permanent feature of the global workforce.
From the paper:
"Over the past three decades, the ILO has been both the midwife and the principal international institutional home for the concept of the informal sector. While the phrase 'informal sector' came onto the development scene in 1972, its roots reach back into the economic development efforts of the 1950s and 1960s. With the surprisingly successful rebuilding of Europe and Japan following the Second World War, there seemed no reason why a similar sort of deliberate economy-building effort could not also be applied to the newly emerging countries in the Third World. This technical ethos towards development was especially strong in UN Specialized Agencies like the ILO. It allowed them a measure of protection from Cold War political crossfire without undercutting either their raison d’être nor their universality.
Attention to the informal sector crescendoed in the early 1990s. The 1991 Director General’s Report, The dilemma of the informal sector, notes that 'Contrary to earlier beliefs, the informal sector is not going to disappear spontaneously with economic growth. It is, on the contrary, likely to grow in the years to come, and with it the problems of urban poverty and congestion will also grow.' A growing urbanization is consistent with the developmental expectations of the 1950s and 1960s. However, that this trend towards urbanization would represent a nexus of seemingly unsolvable problems of grinding urban poverty is quite different from that earlier thinking. The upward spiraling dynamics of 'modernization' which were supposed to accompany urbanization, and lead to economic 'takeoff,' didn’t kick in; there wasn’t any trickle-down of any significance, nor should any be expected, at least not within any reasonable time frame. This is an important conclusion, with fundamental implications for the conventional development paradigm."
Link to the paper.
- Keith Hart's 1973 paper "Informal Income Opportunities and Urban Employment in Ghana" coined the phrase "informal sector." From the paper: "The distinction between formal and informal income opportunities is based essentially on that between wage-earning and self-employment. The key variable is the degree of rationalization of work—that is to say, whether or not labour is recruited on a permanent and regular basis for fixed rewards." Link.
- A 2019 paper by Aaron Benanav (previously shared here) critically appraises the ILO's attempts at defining informality, situating the emergence of the "informal sector" as tied to the mid-century efforts to "generate a globally operational concept of unemployment for use in the 'developing world.'" Link. (For a broader, less empirical take along similar lines, see Michael Denning's 2006 article "Wageless Life." Link.)
- A new IZA paper by Andrea Brandolini and Eliana Viviano looks at contemporary employment statistics and proposes supplemental indices that "account for people's experience in labor market states (e.g. work intensity for the employed and search intensity or unemployment duration for the unemployed)." Link.
- "All the materials and human instruments of production are present in abundance, nay in excess. But their normal collaboration is impossible, because they cannot market the goods they could produce, so as to cover even the barest costs of the production." From 1924, The Economics of Unemployment by J. A. Hobson. Link.
Regulatory regimes and migrant social networks
UCLA Sociology PhD candidate PEI PALMGREN analyzes how variations in state regulatory regimes influence the characteristics of migrant social networks by comparing the networks of Kachin refugees in Kuala Lumpur and Los Angeles.
From the paper:
"Between 2002 and 2014, over 130,000 refugees from Myanmar resettled to the U.S. from Malaysia or Thailand, including many originating in Myanmar’s Kachin State. Drawing from participant observation and in-depth interviews with Kachin refugees in Kuala Lumpur, Malaysia, and Los Angeles, California. In both locations, Kachin networks and the local refugee management regime feed off each other to manage the migration process in different ways, with key roles played by hybrid institutions rooted in grassroots adaptation efforts yet linked to formal institutional resettlement mechanisms. While the analysis of Kachin social networks demonstrates that displaced people have the capacity to work together to survive and adapt to conditions of displacement, such capacity is greatly contingent upon national policy and local power contexts, local labour market conditions, and the ability of refugees to accumulate social capital."
Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you'd like to see shared here? Send it our way: email@example.com.
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- On the blog this week, a new post by Unlearning Economics assesses the weaknesses of Expected Utility, and stresses the importance of time and psychology for developing accurate theories of decision-making. Link.
- A USA Today article on education deserts takes up JFI's school concentration research, which we published back in December. JFI Higher Ed Finance lead Laura Beamer comments in the article: "It's a stark reality: the richer ZIP codes have more education options." Link to the story, link to our research.
- "Sons of fathers randomly called by the Vietnam War draft have lower earnings and are more likely to volunteer for military service." Sarena Goodman and Adam Isen examine the generational effects of the draft. Link.
- Annie Lowrey reflects on America's "Great Affordability Crisis." Link. At Project Syndicate, Kaushik Basu anticipates "The Approaching Debt Wave." Link.
- "Using new data, we characterize Pinochet’s privatizations in Chile and find that some firms were sold underpriced to politically connected buyers. Once democracy arrived, they formed connections with the new government, financed political campaigns, and were more likely to appear in the Panama Papers." Felipe González, Mounu Prem, and Francisco Urzúa examine how privatizations tie together the politics of democracies and dictatorships. Link. Relatedly, Sebastian Edwards and Leonidas Montes reveal new evidence on Milton Friedman's 1981 meeting with Pinochet. Link.
- Claudia Sahm (of Sahm Rule fame) interviewed by Matt Yglesias on the Vox Weeds podcast. Link.
- Jessica Trounstine on land use regulations and urban segregation since the 1970s. Link.
- In a new World Bank report, 20 scholars summarize major insights in development economics over the past decade, including a discussion of pilot scaling, institutional design, and the relationship between macroeconomic goals and microeconomic policy foundations. Link.
- More development econ: Nathan Nunn with a new policy brief for Econfip. "We may have our largest and most positive effects on alleviating global poverty if we focus on restraining ourselves from actively harming less-developed countries rather than focusing our efforts on fixing them." Link.
- "The conventional distinction between white-collar and production workers has concealed substantial deskilling among manufacturing production workers since the 1950s." A 2019 post at VoxEU from David Kunst, on deskilling in manufacturing jobs. Link.
- Raluca Grosescu and Ned Richardson-Little survey "state socialist approaches to international criminal and humanitarian law." Link.
- "Monetary policy can be deployed towards social purposes other than controlling inflation, in institutional configurations other than isolation from the rest of the government and with instruments other than interest rate manipulation." Benjamin Braun and Leah Downey on expanding the scope of central banking. Link. And Sebastian Alvarez "investigates the conditions under which the globalization of the domestic banking sector unfolded in Brazil and Mexico during the dizzying expansion of foreign finance that culminated in the international debt crisis of 1982." Link.
- Yikai Wang models "The Politico-Economic Dynamics of China’s Growth." Link.
- "Empires facilitated trade within their controlled territories by building and securing trade and migration routes, and by imposing common norms, languages, religions, and legal systems, all of which led to the accumulation of trading capital. In this paper, we uncover how the rise and fall of empires over the last 5,000 years still influence world trade. We collect novel data on 5,000 years of imperial history of countries, construct a measure of accumulated trading capital between countries, and estimate its effect on trade patterns today. Our measure of trading capital has a positive and significant effect on trade that survives controlling for potential historical mechanisms such as sharing a language, a religion, genes, a legal system, and for the ease of natural trade and invasion routes. This suggests a persistent and previously unexplained effect of long-gone empires on trade." By Gunes Gokmen, Wessel N. Vermeulen, and Pierre-Louis Vézina. Link.