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  • Since the release of the report of a comprehensive employment mission to Kenya undertaken by the ILO in 1972, the term “informal sector” has gained acceptance in international official documents. Initially the informal sector was considered to be mainly composed of the urban “working poor” migrated from rural areas in search of work. Later it was recognised as an important employment-generating sector and an important source of production and income (Hussmanns and Mehran 1989). Hussmanns R and F.Mehran (1989). Viable Approach for Measuring Employment in the Informal Sector of Developing Countries , presented in the 47th Session of the International Statistical Institution (Paris, 1989).
  • The Fifteenth International Conference of Labour Statisticians (15th ICLS), held in January 1993, eventually adopted a resolution concerning statistics of employment in the informal sector that provides an international statistical standard definition of informal sector.
  • According to the15 th ICLS, informal sector enterprises are characterised by small size in terms of employment, non-registration of enterprises and non-registration of employees. The size limit, or cut-off, for enterprises of informal employers was not specified by the 15 th ICLS because it may have to vary between countries, and even within a given country, between branches of economic activity. Non-registration of unincorporated enterprises refers to absence of registration under factories or commercial acts, tax or social security laws, professional groups' regulatory acts or similar acts, and laws or regulations established by national legislative bodies. The non-registration of the employees of the enterprise was defined in terms of the absence of employment or apprenticeship contracts which commit the employer to pay relevant taxes and social security contributions on behalf of the employees or which make the employment relationships subject to standard labour legislation. Only the enterprises without any of its employees registered could be in the informal sector. Hussmanns (1999) is of the view that this criterion is especially useful in countries where the registration of workers also leads to the registration of the enterprises employing them. Concerned about effective enforcement of the labour laws by government in some developing countries, Abbasi (1999) suggests not to use it in developing the common definition. Clearly, the three main criteria of defining the informal sector, as adopted by the 15 th ICLS refer to (a) absence of legal organisation (unincorporated enterprises), (b) type of accounts (no complete set of accounts) and (c) product destination (at least some market output). To enable international comparability of informal sector statistics, the Delhi Group made a number of recommendations concerning definition of informal sector. The most important recommendation among them is that all countries should use these three criteria for defining the informal sector. Besides this, the Group makes provisions for flexibility relating to other criteria like employment size, inclusion of paid domestic workers, and inclusion of agricultural activities, with specific guidelines for providing estimates to attain international comparison in these respects.
  • While defining the concept of ‘informal sector’, the 15 th ICLS was required to keep in view the wide range of conditions prevailing in different parts of the world. They were further constrained by the requirement that the definition could also be used for national accounting purposes. Mainly to comply with the latter requirement, the 15 th ICLS was induced to define ‘informal sector’ in terms of characteristics of the enterprises carrying out the productive activities rather than on the characteristics of the activities or employment conditions. Accordingly, persons employed in informal sector were defined as those who were employed in at least one informal sector enterprise. The informal sector was defined as a sub-sector of the 1993 SNA household sector. The 15 th ICLS definition of informal sector leaves a section of workers who are engaged in enterprises of the formal sector under informal contracts out of the purview of ‘informal sector activities’, though information on them are equally important in understanding the labour market operating under informal arrangements. The concept of employment in informal sector does not embrace the concept of informal employment , i.e. persons employed in jobs under informal arrangements. “The 15 th ICLS was aware of the need for statistics not only on employment in the informal sector, but also on employment in informal jobs” (OECD 2002). Thus it is found necessary to complement the statistics using the enterprise-based definition of the informal sector with data on informal employment in the formal sector enterprises. Hussmanns (2001) has proposed a conceptual framework for measuring informal sector as well as informal employment. The framework is founded on a cross-classification of the type of enterprises and the status of employment of the jobs (ILO 1982).
  • While defining the concept of ‘informal sector’, the 15 th ICLS was required to keep in view the wide range of conditions prevailing in different parts of the world. They were further constrained by the requirement that the definition could also be used for national accounting purposes. Mainly to comply with the latter requirement, the 15 th ICLS was induced to define ‘informal sector’ in terms of characteristics of the enterprises carrying out the productive activities rather than on the characteristics of the activities or employment conditions. Accordingly, persons employed in informal sector were defined as those who were employed in at least one informal sector enterprise. The informal sector was defined as a sub-sector of the 1993 SNA household sector. The 15 th ICLS definition of informal sector leaves a section of workers who are engaged in enterprises of the formal sector under informal contracts out of the purview of ‘informal sector activities’, though information on them are equally important in understanding the labour market operating under informal arrangements. The concept of employment in informal sector does embrace the concept of informal employment , i.e. persons employed in jobs under informal arrangements. “The 15 th ICLS was aware of the need for statistics not only on employment in the informal sector, but also on employment in informal jobs” (OECD 2002). Thus it is found necessary to complement the statistics using the enterprise-based definition of the informal sector with data on informal employment in the formal sector enterprises. Hussmanns (2001) has proposed a conceptual framework for measuring informal sector as well as informal employment. The framework is founded on a cross-classification of the type of enterprises and the status of employment of the jobs (ILO 1982). Informal employment by this definition would comprise employment in the informal sector (assuming no formal jobs in informal sector) plus jobs of the following two groups of workers (henceforth referred to as the two groups of informal workers outside informal sector, or in short IWOIS): (i) own-account workers – producers for own final use only – and contributing family workers: The largest constituent of this group are the subsistence farmers and family workers assisting them. Employers in agricultural farms outside the formal sector are included in informal employment, as they are not subject to taxation or social protection. The contribution of these workers is included in the unorganised segment in national accounting. (ii) employees with informal jobs in formal sector enterprises and employees in unincorporated private enterprises engaged in non-market production.
  • According to the15 th ICLS, informal sector enterprises are characterised by small size in terms of employment, non-registration of enterprises and non-registration of employees. The size limit, or cut-off, for enterprises of informal employers was not specified by the 15 th ICLS because it may have to vary between countries, and even within a given country, between branches of economic activity. Non-registration of unincorporated enterprises refers to absence of registration under factories or commercial acts, tax or social security laws, professional groups' regulatory acts or similar acts, and laws or regulations established by national legislative bodies. The non-registration of the employees of the enterprise was defined in terms of the absence of employment or apprenticeship contracts which commit the employer to pay relevant taxes and social security contributions on behalf of the employees or which make the employment relationships subject to standard labour legislation. Only the enterprises without any of its employees registered could be in the informal sector. Hussmanns (1999) is of the view that this criterion is especially useful in countries where the registration of workers also leads to the registration of the enterprises employing them. Concerned about effective enforcement of the labour laws by government in some developing countries, Abbasi (1999) suggests not to use it in developing the common definition. Clearly, the three main criteria of defining the informal sector, as adopted by the 15 th ICLS refer to (a) absence of legal organisation (unincorporated enterprises), (b) type of accounts (no complete set of accounts) and (c) product destination (at least some market output). To enable international comparability of informal sector statistics, the Delhi Group made a number of recommendations concerning definition of informal sector. The most important recommendation among them is that all countries should use these three criteria for defining the informal sector. Besides this, the Group makes provisions for flexibility relating to other criteria like employment size, inclusion of paid domestic workers, and inclusion of agricultural activities, with specific guidelines for providing estimates to attain international comparison in these respects.
  • What is necessary for exact description of informal employment is a clear definition of ‘informal jobs’. Hussmanns (2001) defines informal employee jobs as employment contract not subject to standard labour legislation, taxation, social protection or entitlement of certain employment benefits. Such jobs are mostly undeclared, casual or of short duration, either without employment contracts or with short-term contracts. This corresponds to the definition of unregistered employees specified in the 15th ICLS resolution. Paragraph 9 (6) of the resolution states that “(e)mployees may be considered registered if they are employed on the basis of an employment or apprenticeship contract which commits the employer to pay relevant taxes and social security contributions on behalf of the employee or which makes the employment relationship subject to standard labour legislation”.
  • 5.16. Supply based methods rely on data about the supply of inputs that are used in producing goods and services. Inputs may include a number of primary raw materials, just one major raw material, labour, land, fixed capital stock, etc. If data on the supply of one or several inputs used in a given production activity are available, the total production of the activity that uses these inputs can be estimated. 5.33. Demand based methods aim at determining production by using indicator data on specific uses of goods and services. These indicators can be any use of goods and services that sufficiently describe their production. They could be household final consumption expenditures of a certain commodity ( e.g. health and personal services), uses of major products as raw materials ( e.g. processing of agricultural products), exports ( e.g. major export commodities), or administrative data indicating demand for a product ( e.g. motor vehicle registrations and building permits). After a measure of output has been obtained, value added estimates can be derived using output/value added ratios, as for supply-based methods. 5.34. Demand indicators are usually incomplete. In most cases, only data on one or a limited number of major uses are available. Income Based Methods 5.36. Data on some categories of income are available from administrative sources and can be used to obtain an indication of production covered by the administrative system. Information on income taxes or social security contributions paid by self-employed persons (or private entrepreneurs) are often readily available. However, adjustments are usually necessary to account for activities not covered by tax laws and for underreporting of incomes for tax purposes. Commodity Flow Method 5.39. The commodity flow method involves balancing total supplies and uses of individual products. It is used to estimate the output of a commodity by balancing the supply and use of that commodity, using the following equation: output = the sum of all intermediate consumption, final consumption, changes (positive or negative) in inventories, gross fixed capital formation, acquisition less disposals of valuables, and exports minus imports.
  • Labour Input Method At the core of the method are three basic steps: • obtain estimates of the supply of labour input to GDP, for selected economic activity and size of enterprise, from a household labour force survey and/or other demographic sources; • obtain estimates of output per unit of labour input and value added per unit of labour input for the same activity and size breakdown from regular or special purpose enterprise survey; and • multiply the labour input estimates by the per unit ratios to get output and value added for the activity and size categories.
  • This procedure can be expected to give a more exhaustive coverage of production if the household survey data give more complete coverage of labour input to GDP than do the enterprise survey data. There are two reasons to suppose that this is likely. • Household based surveys pick up labour inputs to enterprises that are not included in enterprise surveys, for example because these enterprises are too small to be registered in the files from which the survey frames are constructed or because they are too small to be included within the survey. • Individuals may report their labour inputs to household surveys whereas enterprises may conceal those same inputs in order to evade taxes or administrative regulations.
  • ILO Compendium of official statistics on employment in the informal sector (2002) recorded successful experiences of many countries in using labour force surveys as a source of data on employment in the informal sector. For measurement of informal employment the labour force survey is the best instrument. If the measurement objectives are to monitor the evolution of informal sector employment and informal employment in terms of the number and characteristics of the persons involved and the conditions of their employment and work, it is sufficient to include periodically, in an existing labour force survey, some additional questions pertaining to the informal sector or informal employment definitions and to the characteristics of informal sector employment or informal employment.
  • As business register does not usually cover the informal sector units, an establishment survey can be planned only if a sampling frame of establishments arising out of a general economic/establishment census is available. Specific censuses of informal sector units are not advisable as these are prone to coverage and classification errors. However, economic or establishment censuses are largescale, costly operations that, due to resource constraints, many countries cannot undertake or can undertake only in their (major) urban areas. Furthermore, in such censuses full coverage of the informal sector without omissions or duplications is difficult. In a door to door enumeration operation of a census, activities conducted inside the owner's home such as tailoring, food processing or without a fixed location such as construction, transport and ambulant trade are likely to be missed out.
  • In an area sampling technique of surveying households and establishments, a sample of area units are selected at the first stage. Next, in each of the selected first stage unit, it is required to identify and list all establishments operating in the selected area that are neither included nor linked to any enterprise appearing in the list frame used for the survey of the ‘list frame segment’. The establishments thus identified and falling in the coverage of the survey are then classified by kind-of-activity and a sample of units is drawn from the listed establishments for each kind-of-activity. 7.44 The group of activities that are given special treatment in this approach is that of the mobile units such as those in trade, services and transport, which form an important group in most developing countries. This approach permits covering of the enterprises/ establishments that are run by the households, even those without fixed premises. 7.45 In this approach, all identifiable establishments outside the owners’ home located in the selected area unit as well as household-based enterprises located within home are listed by a house-to-house (structure-to-structure) visit. In addition, the units without any fixed premises of operation like hawkers, street vendors and service providing free-lancers (mobile units) are identified through additional questions put to the households at the listing stage and are listed against the household where the proprietor (or a partner of a partnership concern) resides. This way it is ensured that all establishments in the selected areas that are within the scope of the survey are included in the list which is then used for selection of sample of establishments.
  • To measure both informal and informal sector employment a household survey that also measures total employment is the recommended data collection vehicle. On the other hand, the measurement of production and enterprise characteristics warrants the conduct of an enterprise survey. It consists of two phases. The first phase is a household survey and the second phase is an enterprise survey. In addition to the measurement objectives, the first phase survey is also crucial for constructing the sampling frame for the enterprise survey. Generally, the household survey is designed in relation to its main objective—e.g., employment or unemployment— involving a typical multi-stage sample with an area-based frame at the penultimate stage and households or housing units at the last stage. In a ‘1-2’ survey, the sample areas are selected on the basis of the sample design for phase 1. Within the sample areas, HUEMs may be associated with (a) households within the sample areas, (b) households outside the sample area, and (c) small units in the business register. (Refer to Figure 4) Thus, ideally, the sampling frame of HUEMs in a ‘1-2’ survey can be constructed by compiling the small units in the business register, identifying the HUEMs ‘belonging’ to households within the sample areas and a listing operation which would identify the HUEMs belonging to households outside the sample area. Or, alternatively, this frame can be constructed through a complete listing of all HUEMs in sample areas.
  • To measure both informal and informal sector employment a household survey that also measures total employment is the recommended data collection vehicle. On the other hand, the measurement of production and enterprise characteristics warrants the conduct of an enterprise survey. It consists of two phases. The first phase is a household survey and the second phase is an enterprise survey. In addition to the measurement objectives, the first phase survey is also crucial for constructing the sampling frame for the enterprise survey. Generally, the household survey is designed in relation to its main objective—e.g., employment or unemployment— involving a typical multi-stage sample with an area-based frame at the penultimate stage and households or housing units at the last stage. In a ‘1-2’ survey, the sample areas are selected on the basis of the sample design for phase 1. Within the sample areas, HUEMs may be associated with (a) households within the sample areas, (b) households outside the sample area, and (c) small units in the business register. (Refer to Figure 4) Thus, ideally, the sampling frame of HUEMs in a ‘1-2’ survey can be constructed by compiling the small units in the business register, identifying the HUEMs ‘belonging’ to households within the sample areas and a listing operation which would identify the HUEMs belonging to households outside the sample area. Or, alternatively, this frame can be constructed through a complete listing of all HUEMs in sample areas.
  • Transcript

    • 1. Measuring Informal Sector and Informal Employment National Workshop on Informal Employment and Informal Sector Data Collection: Strategy, Tools and Advocacy Amman 13-15 April 2008
    • 2. Presentation Plan• A Brief Background• Definitions of Informal Sector and Informal Employment• Main Uses of Informal Economy Data• Methods of measuring Informal sector• Strategies of Data Collection• Advantages and Disadvantages
    • 3. Informal Sector – A Brief Background (1)• ILO’s Report of a Comprehensive Employment Mission to Kenya (1972) used the term “informal sector”.• Since then the term has gained acceptance in international official documents.• Initially, labour statisticians considered “informal sector” as composed of urban “working poor” migrated from rural areas in search of work.• Later, recognised as an important employment-, production- and income- generating sector – present as much as in rural areas as in urban areas
    • 4. Informal Sector –A Brief Background (2)• Though the term “informal sector” is of relatively recent origin, the idea of such a segment of economy has existed since long.• Particularly for ensuring complete coverage of the national accounts statistics, building an adequate database especially for this segment has been a matter of concern since the early 1950s.
    • 5. Informal Sector –A Brief Background (3)• The official statisticians have referred to this segment – or a closely comparable one – by various names like “unregistered”, “unorganised” and “unrecorded” segment of the economy.• The coverage of the segment of the economy referred to by these terms were indeed varied.
    • 6. Informal Sector –A Brief Background (4)• The 15th ICLS (1993) adopted a resolution relating to statistics of employment in the informal sector.• This provided an international statistical standard definition of informal sector.• The SNA 1993 identified “informal sector” as one of the segments of economy that are not covered or not adequately covered in the national accounts.
    • 7. Non-observed Economy (NOE)In measuring the activities within 1993 SNA production boundary exhaustively, the 5 problem areas that are most likely to be non-observed are: – Underground – Illegal – Informal sector – Household production for self consumption – Deficiencies of basic data collection programme. [OECD manual (2002) on Non-Observed Economy (NOE)]
    • 8. Informal sector – a part of NOE• Clearly, the NOE problem areas are not mutually exclusive.• But, the informal sector is the most important component in many countries, especially in developing countries.• Besides obtaining exhaustive estimate of GDP, measuring contribution of informal sector serves important purposes relating to economic policies.
    • 9. Definition of Informal Sector• The three main criteria of defining the informal sector, as adopted by the 15th ICLS, refer to –Absence of legal organisation (unincorporated enterprises) –Type of accounts (no complete set of accounts) –Product destination (at least some market output)• Consistent with the 15th ICLS, the SNA 1993 (and its update) defines informal sector as a subset of the “household sector”.
    • 10. Definition of Informal Employment(1)• Primarily, for consistency with the framework of SNA, “informal sector” was defined by enterprise approach, i.e.• in terms of characteristics of the enterprises;• instead of labour approach, based on the characteristics of the workers and their employment conditions.• The labour statisticians were even then aware that this definition would not be able to capture all forms of “informal employment” .
    • 11. Definition of Informal Employment(2)• The concept of employment in informal sector does not embrace the concept of informal employment, i.e. persons employed in jobs under informal arrangements.• As defined by Hussmanns (2001), informal employment comprise employment in the informal sector plus jobs of the following groups of workers: (i) own-account workers who produce for own final use only; and contributing family workers; (ii) employees with informal jobs in formal sector enterprises and employees in unincorporated private enterprises engaged in non-market production.
    • 12. Definition of Informal Sector –further details (1)• The two conditions: (i) unincorporated enterprise and (ii) absence of accounts follow from that it is a subset of household sector.• The criterion “production for market” excludes – household enterprises with no market production – own account construction, – services of paid domestic workers.
    • 13. Definition of Informal Sector –further details (2)• Exclusion of household enterprises with non-market production, leads to a problem of uniform application.• Some agricultural activities are carried out solely for subsistence, while others for selling the produce in the market.• Thus it is additionally proposed that all agricultural activities be excluded from the purview of informal sector, though it may be quite significant in most of the countries with large informal sector.
    • 14. Definition of Informal Sector –further details (3)• There are other criteria that are proposed for definition of “informal sector” like – exclusion of enterprises above a specified size – in terms of employment – exclusion of persons engaged in professional or technical activities like doctors, lawyers and engineering consultants.• The Delhi Group has been working on framing a uniform definition of informal sector – ILO is expected to give a final shape to it very soon.
    • 15. Definition of Informal Employment– further details (1)• The 15th ICLS definition of informal sector is not a dichotomous sub-sectoring of the economy.• It suggests a trichotomy – formal, informal & neither.• The last category includes household enterprises like – those engaged solely in agricultural activities, or – production of goods solely for own final use or – production of services employing paid domestic workers.• All employment in this category is treated as informal employment in addition to those in informal sector.
    • 16. Definition of Informal Employment– further details (2)• Further, there is informal employment in formal sector, whose identification requires a clear definition of ‘informal jobs’.• Informal employee jobs: employment contract not subject to standard labour legislation, taxation, social protection or entitlement of certain employment benefits. [Hussmanns (2001)]• Such jobs are mostly – undeclared, casual or of short duration, – either without employment contracts or with short- term contracts.
    • 17. Informal Economy Data– Main Uses (1)• Informal economy – comprises all informal sector enterprises and informal employment.• Data on informal economy are of interest to mainly two groups of users: – labour statisticians & economists for labour welfare policy making and – national accountants for attaining exhaustive coverage of National Accounts Statistics.
    • 18. Informal Economy Data – Main Uses (2)• The main requirements for labour welfare related policy making are data on – entitlements, benefits, conditions of work and social protection of informal employment; – structure of informal sector like their productive activities, employment- and income-generation, conditions and constraints of operation and links with the formal sector.• The national accountants - mainly concerned about attaining exhaustive coverage - need data on production-related parameters of informal sector.
    • 19. Methods of measuring Informal Sector• Two broad groups of methods: – Macro-model methods – National accounts methods to achieve exhaustiveness• Both these groups of methods attempt to measure NOE (also referred to as ‘shadow economy’, ‘hidden economy’, ‘underground economy’), in general, - of which informal sector is but a component – albeit the major component.
    • 20. Macro-model Methods• Macro-model methods – as termed in the Handbook - produce an estimate of the entire NOE by means of a single model.• The Handbook – “…not considered useful in obtaining exhaustive estimates of GDP or NOE …”• “… and tend to tend to produce spectacularly high measures …”• Three broad types: – Monetary methods – Global indicator method – Latent variable methods
    • 21. Monetary Methods• These rely on the assumption: “unexplained” (by the model) monetary developments owes to incomplete coverage of official GDP estimate.• Start with Fisher’s quantity theory equation• Obtain an estimate of GDP• Difference between the model-based estimate and official estimate is considered a measure of NOE.• Three variants: –Transaction method –Cash/deposit ratio method –Cash demand method
    • 22. Global Indicator Method• This method uses a single variable like electricity consumption as the indicator of entire economic activity.• The difference between the estimate of GDP obtained under the model and the official GDP is claimed to represent a measure of NOE.
    • 23. Latent Variable Methods• These are multiple regression models with a non- observed dependent variable and a number of observed explanatory variables.• Variants are: –LISREL (linear Independent Structural Relationships) models of Joreskog and Sorbom (1993) –Multiple Indicator Multiple Cause approach (MIMIC) - Frey and Weck-Hanneman (1984) –DYMIMIC (the dynamic multiple-indicators multiple- causes approach)
    • 24. GDP compilation in production approach – Indirect Methods• Indirect methods of covering NOE in the GDP estimate: –Supply based approaches, including labour input method; –Demand based approaches; –Income based approaches; –Commodity flow approaches.• Labour Input Method (LIM) is the most important procedure that has been in use since 1950s to measure contribution of unorganised sector to GDP.
    • 25. Labour Input Method (1)The labour input method (LIM) of estimating value added / output for the informal segment (for an economic activity or a group of economic activities) consists of:• obtaining an estimate of labour input from Population Census and / or Labour Force Survey (LFS) using other sources for the informal segment• obtaining estimates of output or value added per unit of labour input for the informal segment from Establishment Survey; and• multiplying the estimate of labour input by the estimate of per unit value added / output to arrive at an aggregate estimate of value added / output.
    • 26. Labour Input Method (2)• This is one of the most effective methods of measuring gross value added (GVA) of informal sector – usually by economic activity. Since – most often, the enterprise surveys fail to cover all enterprises. – again, costs actually incurred for hiring (casual) labourers are often shown as services charges rather than compensation of employees and – hired labour not included in labour input.• In such cases, this procedure can be give a more exhaustive coverage, since LFS data give more complete coverage of labour input.
    • 27. Labour Input Method (3)• Measuring the value of production of goods and services by LIM, therefore, demand a fair degree of precision in the estimates of – labour input (number of workers adjusted for multiple employment) based on data from households (LFS) and – Gross value added per worker (GVAPW) from enterprises obtained from enterprise survey (ES), separately for activity groups.
    • 28. Data Needs• The requirements of estimates on informal economy can be summarised as follows:• For Informal Employment: – parameters defining informal employment (LFS) – terms & conditions of employment (LFS) – structural information (ES) – productivity (ES)• For Informal Sector: – parameters defining informal sector enterprise (ES) – production related parameters (ES), including labour input, output, intermediate consumption and GVA.
    • 29. Data Collection Strategies (1)• For measurement of informal employment and informal sector employment the LFS is the best instrument.• Requires inclusion of some additional questions relating to definitions. [ILO Compendium of Official Statistics on Employment in the Informal Sector (2002)]• Informal sector production can be measured thru enterprises surveys covering the informal sector.
    • 30. Data Collection Strategies (2)The main options of colleting data on production of informal sector are as follows:1. List-frame based establishment survey2. Area frame based establishment survey3. Area frame based mixed household and enterprise surveys and4. Area frame based Integrated “1-2” surveys
    • 31. Data Collection Strategies (3)List-frame based establishment survey:• business register does not usually cover the informal sector units• List-frame has to be developed from a general economic/establishment census• But, census do not ensure full coverage.• Thus, list-frame based establishment surveys can not ensure complete coverage of informal sector.
    • 32. Data Collection Strategies (4)Thus, area-frame based surveys are essential for complete coverage of informal sector.• But the conventional area-frame based establishment survey suffer from the same limitation as the Establishment Census.• In these surveys, a list frame of establishments is developed for each selected area unit by door to door enumeration.• This procedure is prone to omission of activities carried out inside the owners home
    • 33. Data Collection Strategies (5)• The choice of method is, therefore, practically restricted to the two area-frame surveys, viz. – Mixed household enterprise survey and – Integrated “1-2”survey• Both these methods use a multi-stage (usually two- stage) sampling scheme• A sample of area units are selected as the first stage unit (fsu) in both the methods.• The methods differ at the second-stage.
    • 34. Mixed household enterprise survey (1)• Variously described in literature.• As per the (Draft) Manual on Surveys of Informal Employment and Informal Sector, its sampling frame at the second stage consists of the following: i. all identifiable establishments outside the owners’ home located in the selected area unit; ii. household-based enterprises located within home; and iii. the units without any fixed premises of operation are listed by a structure-to-structure visit.• The units of later two categories are listed against and interviewed in the owners’ households.
    • 35. Mixed household enterprise survey (2)• Units excluded from the survey coverage are not listed, e.g. – agricultural or formal sector establishments and – units covered in a list frame based survey.• Within-scope units without fixed premises of within owner’s home are identified through additional questions put to households during listing; and• are listed against the household where the proprietor (or a partner of a partnership concern) resides.• This way, all establishments within the scope of the survey in the fsu are included in the list.
    • 36. Integrated “1-2” Survey• This approach consists of two phases: – First phase: a household survey (LFS) and – Second phase: an enterprise survey.• The first phase used also for constructing the sampling frame for the enterprise survey.• From the sample households in the first phase, the within-scope enterprises owned by the households are identified.• In the 2nd phase, a sample of within-scope enterprises that are owned by the households is drawn for the enterprise survey.
    • 37. Integrated “1-2” Survey• The within-scope enterprises selected for survey may either be – Within the fsu without fixed premises, or – Within the fsu with fixed premises – Outside the fsu• In all these cases, the enterprise is surveyed. [as indicated in the next slide]
    • 38. Integrated “1-2” Survey Households owning/ operating enterprises Within the sample area Outside the sample area and with fixed premises Capture at premise With fixed Without fixed premises premises Capture at premise Capture at household
    • 39. Advantages & Disadvantagesof the two methodsMixed Hhd-entp. survey “1-2” Survey• May be conducted • Provides data on informal independent of other surveys employment & informal using EC data sector• Estimate of informal sector • Estimates of informal sector employment varies from that employment from 2 sources obtained from Hhd. Survey. likely to be consistent.• Involves extra costs – • Involves extra costs for expectedly marginally more travel – for surveying - for enterprise listing. enterprises outside the fsu.
    • 40. Main disadvantage of “1-2” Survey• In a stage sampling, efficiency of an estimate depends on how well the inclusion probability of the fsu’s (pa) are correlated to the fsu-level value of the parameter, e.g. sum of GVAs of all within- scope enterprises of the fsu.• In a mixed household enterprise survey, this can be attempted by using EC data.• In an “1-2” survey, the choice of size variable for fsu selection is based on distribution of population and not on that of within-scope enterprises.
    • 41. Possible way out• For an integrated “1-2” survey, population census data may be used as the sampling frame.• Area units (fsu’s) with relatively high concentration of self-employed workers may be put in a separate stratum and – a higher sampling fraction may be used for drawing a sample of fsu’s from it, – by PPS – using number of self-employed workers as size variable.• This could be a possible method of capturing a representative sample of informal sector enterprises, in absence of Economic Census data.
    • 42. Thank You

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