1) The informal economy makes up a large share of employment in many developing countries and includes survival activities, micro-entrepreneurs, and workers or firms subordinated to larger formal firms. 2) Empirical evidence on the impact of trade opening on informality is mixed and depends on country and sector, but well-designed labor market policies can help facilitate transition to formality. 3) Informality is associated with lower economic growth, limited export opportunities, impaired adjustment to changes, and vulnerability to economic shocks due to lack of skills and fiscal resources.

1. Globalisation and informal jobs in developing countries Marc Bacchetta, WTO Ekkehard Ernst and Juana P. Bustamante, IILS (ILO)

2. MOTIVATION “ Addressing informality is not only a matter of concern for social equity. It also helps to improve a country’s efficiency, as the informal economy constitutes a drag on the capacity to foster high value-added production and compete in the world economy. Reducing the size of the informal economy is therefore a key policy objective from a developmental perspective .”

4. I Informality: Key concepts and facts

8. The informal economy is large and in many countries it has been growing Source : IILS estimates based on the IILS Informality Database.

9. II Trade opening and the informal economy

14. Effect of globalization on informality

15. III Consequences of informality for trade and growth

22. IV Policies

27. V Open issues