7th IMF Statistical Forum: Measuring the Informal Economy

November 14-15, 2019

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Preliminary Agenda

Papers will be added as they become available.

For the purpose of the IMF Statistical Forum, the informal economy broadly comprises (i) the production of goods and market services of households; and (ii) the activities of corporations (illegal; underground) that may not be covered in the regular data collection framework for compiling macroeconomic statistics. This scope of the informal economy considers not only the domestic activities, but also the cross-border transactions of resident units and reflects the need for a coherent macroeconomic statistics framework.

Session I: Definition and Scope of the Informal Economy

A key issue in research on the informal economy is the definition of “informal”. The term has been used broadly to describe the part of the economy that may not be covered in official statistics, production taking place outside the regulated economy, or the production of households. The term has also been used interchangeably with others (such as underground, shadow, or hidden) to describe not only the activities, but also the producers, consumers, and employment that may elude official statistics.

Some activities may be omitted from the official statistics because the production contravenes national laws (illegal) or may be hidden from the authorities because the units would like to evade official regulations (underground). Other activities may also be omitted because they are undertaken by households—and not business units—that are not required to adhere to the regulations that may be applied to businesses. There may be considerable overlap between these various types of activities and attempting a clear delineation could introduce inconsistencies in estimation for a given economy over time.

This session will first take stock of the concepts and definitions presented in the existing statistical manuals and will provide a critical assessment of their suitability for compiling the requisite statistics for policy analysis. Consequently, it will propose a definition and perimeters of the informal economy in the context of macroeconomic statistics.

Session II: Traditional Estimation Practices: Determining the Level and Growth of the Informal Economy

Estimates of the informal economy vary widely, depending on the data sources and compilation techniques used. Currently, there are two broad traditional approaches that are used to derive these estimates: (i) direct approaches within a national accounting framework (ii) indirect approaches (alternatively called “indicator” approaches) based on statistics from related sources and macro-economic estimation techniques [1].

Coverage of the informal economy requires additional source data, especially through surveys and censuses. However, the unavailability of resources remains a key impediment to source data collection and hence, covering the informal economy in developing economies.

Countries have developed a range of practices to measure the components of the informal economy. These practices are determined by availability of source data, resources, and statistical capacity. User interest and policy needs also play a role in influencing which components are addressed.

This session will review the consistency and reliability of the methods used to estimate production, employment, and productivity in the informal economy. Selected countries will present their estimation practices, as well as their challenges (resources, data, estimation) and how these have been addressed. Is it possible to derive separate estimates for illegal, underground, informal activities? Do these components require different estimation techniques?

Session III: New Technologies and New Potential Data Sources—Innovation and Big Data

Traditional data collection methods comprise surveys of individuals and/or households (such as household budget surveys and labor force surveys), surveys of establishments, as well as mixed household and establishment surveys.

This session will present new technologies—often digital—that are being or could be used to derive data to measure economic activity, such as big data, including satellite imagery or mobile phone data. It will review the practical usefulness of these technologies from a data source perspective, the reliability of the output, and the scope for improving the estimation of the informal economy. Selected case studies will reflect a cross-section of practices and data sources for both developing and advanced economies. It will also seek to address some key questions such as: (i) has the increasing use of digital platforms transformed the informal economy; and (ii) has the relative size of the informal economy changed with the increasing use of digital platforms.

Session IV: Measuring Informal Cross-border Flows (Illicit financial flows)

Much of the work on exhaustive macroeconomic statistics and the informal economy focuses on covering the domestic economy. With the exception of some illegal flows such as money laundering, statistical and policy work on unrecorded cross-border flows have evolved and gained momentum in the international community.

This session will review the estimation of cross-border flows and will focus on the movement of money across borders that is illegal in its source (e.g. corruption, smuggling), its transfer (e.g. tax evasion), or its use (e.g. terrorist financing).

Session V: Closing Panel: Policy Conclusions and Recommendations

[1] Non-official estimates are based exclusively on indirect approaches. These include estimates based on: (i) electricity consumption; (ii) currency demand; (iii) parametric models; and (iv) mirror statistics to estimate cross-border transactions.