## Informal Labour and Credit Markets: A Survey

_IMF Working Papers, February 1, 2010_

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## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/informal-labour-and-credit-markets-a-survey-23611/index.md)
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## Bibliographic details
- Authors: Paul L Levine, Emanuela Lotti, Nicoletta Batini, Young-Bae Kim
- Published: February 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451962963.001

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### Overview and Scope
- Reviews the literature on the informal economy, focusing on empirical findings and approaches to modeling informality.
- Concentrates on labour and credit markets as the markets most affected by informality.
- Emphasizes importance in emerging and other developing economies due to high degrees of informal labour and financial services and implications for macroeconomic policy effectiveness.
- Argues for the need for dynamic general equilibrium (DGE) and ultimately dynamic stochastic general equilibrium (DSGE) models to fully understand costs, benefits and policy implications of informality.
- Concludes the literature on informality is "quite patchy" with several unexplored areas left for research.

### Empirical Findings (as summarized)
- Informality materially affects labour and credit markets in emerging and developing economies.
- High degrees of informal labour and financial services have implications for the effectiveness of macroeconomic policy.

### Modeling Approaches and Methodology
- Surveys existing approaches to modeling informality within both partial and general equilibrium environments.
- Highlights the need for:
  - Dynamic general equilibrium (DGE) models.
  - Dynamic stochastic general equilibrium (DSGE) models for a full understanding of informality’s costs, benefits and policy implications.

### Policy Implications and Recommendations
- Policymaking and macroeconomic policy effectiveness must account for the prevalence of informal labour and financial services in emerging and developing economies.
- Research and model development should prioritize dynamic equilibrium frameworks (DGE and DSGE) to inform policy trade-offs related to informality.

### Research Gaps and Future Directions
- The literature is described as "quite patchy."
- Identifies "several unexplored areas left for research," implying priority for:
  - More comprehensive empirical studies on informal labour and credit.
  - Development and application of DGE and DSGE models that incorporate informality.

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## Content in this bundle

- **1. Informality**
  - [1. Informality (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2010/_wp1042.pdf.md){rel="alternate" type="text/markdown"}
  - [1. Informality (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2010/_wp1042.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/informal-labour-and-credit-markets-a-survey-23611_