The Informal Economy

Colin C. Williams

£50.00  |  $70.00
ISBN 9781911116301
£16.00  |  $25.00
ISBN 9781911116318
£16.00  |  $25.00
ISBN 9781911116325
160 pages   |  210 x 148mm   |  28 February 2019


"This book provides an extensive and fascinating review of the informal economy and carefully discusses policy measures to tackle it." – Friedrich Schneider, Professor of Economics, Johannes Kepler University of Linz


The “informal” economy – economic activity and income outside government regulation, taxation and observation – is, by its very nature, difficult to quantify. Recent estimates suggest it accounts, in OECD countries, for around 13% of national income (in the UK, the equivalent of £150 billion) and in developing nations it can make up as much as three-quarters of all non-agricultural employment. Whatever the exact figures, it is clear that the informal economy plays a significant role in national incomes (eventhough excluded from calculations of GDP or GNP) and affects a large share of the global workforce.

Colin C. Williams provides an authoritative introduction to the topic, explaining what the informal economy is (and what it isn’t) and how it can best be measured. Taking a global perspective, he examines its characteristics in developed, developing and transitional economies, and looks at its role as a driver of economic growth. The theoretical underpinnings are explored, from conceptual origins in the development models of the 1950s, through to present-day discussions, which question whether a formalised economy is always the ideal.

The book considers the economic motivations of the informal economy workforce, which may include tax evasion, circumventing regulations and maintaining state benefits, and assesses the different policy options available to governments to combat them, whether a punitive policy of deterrence, or one of accommodation that recognises the value of the sector in generating income and in meeting the needs of poor consumers.

The book provides a masterly summation of the published research on the informal economy and an expert assessment of the key areas for research going forward. It will be welcomed by students taking courses in development economics, economic growth, labour economics, welfare economics and public policy.


1. Defining the informal economy
2. Evolution of theories explaining the informal economy
3. Measuring the size of the informal economy
4. Characteristics of the informal economy
5. Policy options and approaches
6. Conclusions and future directions

Author Information

Colin C. Williams is Professor of Public Policy in the Management School at the University of Sheffield. He has authored or edited over twenty books, including most recently Confronting the Shadow Economy: Evaluating Tax Compliance and Behaviour Policies (2014). He is Editor of The International Journal of Sociology and Social Policy.

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