February 10th, 2020


Part of Some Totality


"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.
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