Trade and Employment From Myths to Facts - International Labour ...

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Trade and Employment: From Myths to Facts Figure 4.1: Informality around the world (relative to total employment, per cent) Informal employment (in %) 90 80 70 60 50 40 30 20 10 0 52.8 50.1 52.2 78.3 68.5 78.2 Early 1990s Late 1990s 2000s 63.6 60.9 55.7 Latin America Asia Africa Note: Latin America: Argentina, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama, Uruguay and Venezuela; Asia: China, India, Indonesia, Pakistan, Sri Lanka and Thailand; Africa: Botswana, Cameroon, Egypt, Ethiopia, Ghana, Kenya, Malawi, South Africa, United Republic of Tanzania, Zambia and Zimbabwe. Source: IILS estimates based on the IILS Informality Database. Figure 4.2: Within-region variation of informality rates (relative to total employment, percentage) Within-region variation of informality rates (in % 100 90 80 70 60 50 40 30 20 10 0 32.3 74.1 Source: IILS estimates based on the IILS Informality Database. 132 70.8 93.2 Minimum Maximum 38.5 Latin America Asia Africa 80.6
Chapter 4: Trade and the informal economy The informal economy has traditionally been viewed to be the last resort for workers who cannot find a job in the formal economy and who need to engage in small economic activities to earn a living. The informal economy is diverse, reaching from home-based producers, casual wage workers and own-account workers to informal employers. On average, workers in the informal economy earn less and have less job security compared to their counterparts in the formal economy. Both capital intensity and productivity are considerably lower than in the formal sector. Women tend to be more likely to be informal workers than men, and the probability of working in an informal job is highly correlated with the skill level of individuals (ILO and WIEGO, 2000). The less educated are more likely to be in the informal economy. This skill difference is likely to be of importance given the observed skill-biased nature of international trade (Bacchetta, Ernst and Bustamante, 2009). 4.3.2 Trade and the informal economy: Theory and concepts The issues surrounding the informal economy and trade can be conceptualized either as trade influencing the degree of informality in the economy or as the degree of informality influencing the potential gains from trade. A significant number of studies have addressed these issues. Different theoretical models and concepts were developed to analyse the link between globalization and informality. The different concepts reflect the variety of views of the informal economy and its links to the formal economy. No universally accepted concept exists, but the three main views that can be identified are dualist, legalist and structuralist in nature: ● The dualistic view states that no direct link exists between the formal segment and the – inferior – informal segment of the labour market. Often, it is assumed that only the formal economy can engage in international trade. ● The legalistic view sees the informal sector as existing only because of rigid government regulations. Micro-entrepreneurs operate informally to avoid costs associated with registration. ● The structuralist view asserts that the informal economy serves as a refuge or a residual strategy for those who are excluded from the formal economy. The informal economy supplies cheap labour and inputs to larger formal firms. The two segments are connected and interdependent. Informality is therefore seen as a rational response to the obstacles faced in economic development. Within the dualistic structure, there are models with differentiated wages, which emphasize constraints on the mobility between formal and informal labour markets based on, e.g. differences in skills or access to capital, etc. Through such conceptualization of dualistic models, one could show that the number of jobs available in the formal economy could be restricted, for example, due to lack of potential profitability and cost-cutting ventures. 133
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Trade and Employment From Myths to
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Trade and Employment From Myths to
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PREFACE Trade negotiations -bilater
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Trade and Employment: From Myths to
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EDITORS AND CONTRIBUTORS EDITORS Ma
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ACKNOWLEDGEMENTS The editors wish t
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NEW EVIDENCE ON TRADE AND EMPLOYMEN
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Chapter 2: New evidence on trade an
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Region Annualized percentage change
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Region 1980 1985 1990 1995 2000 200
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Figure 2.4.b: Long-run association
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20 See Harrison and Rodriguez-Clare
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ASSESSING THE IMPACT OF TRADE ON EM
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Chapter 3: Assessing the impact of
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A third view is that the type of jo
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REFERENCES Chapter 5: Gender aspect
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