Editing Informal economy (section)

==History==
Governments have tried to regulate aspects of their economies for as long as surplus wealth has existed which is at least as early as [[Sumer]]. Yet no such regulation has ever been wholly enforceable.{{citation needed|date=April 2021}}
[[File:Mercado Negro, La Paz, Bolivia.JPG|thumb|Daily life of the informal economy in the streets of [[Bolivia]]]]

Archaeological and anthropological evidence strongly suggests that people of all societies regularly adjust their activity within economic systems in attempt to evade regulations.{{citation needed|date=April 2021}} Therefore, if informal economic activity is that which goes unregulated in an otherwise regulated system then informal economies are as old as their formal counterparts, if not older.{{citation needed|date=April 2021}} The term itself, however, is much more recent.{{citation needed|date=April 2021}}

The optimism of the [[modernization theory]] school of development had led people in the 1950s and 1960s to believe that traditional forms of work and production would disappear as a result of economic progress in developing countries.{{citation needed|date=April 2021}} As this optimism proved to be unfounded, scholars turned to study more closely what was then called the traditional sector and found that the sector had not only persisted, but in fact expanded to encompass new developments.{{citation needed|date=April 2021}} In accepting that these forms of productions were there to stay, scholars and some international organizations quickly took up the term informal sector (later known as the informal economy or just informality). The term Informal income opportunities is credited to the British anthropologist [[Keith Hart (anthropologist)|Keith Hart]] in a 1971 study on [[Ghana]] published in 1973,<ref>{{Cite journal|last=Hart|first=Keith|date=1973|title=Informal income opportunities and urban employment in Ghana|journal=The Journal of Modern African Studies|volume=11|issue=3|pages=61–89|doi=10.1017/s0022278x00008089|jstor=159873|s2cid=154418205 }}</ref> and was coined by the [[International Labour Organization]] in a widely read study on [[Kenya]] in 1972.{{citation needed|date=April 2021}}

In his 1989 book ''The Underground Economies: Tax Evasion and Information Distortion'', [[Edgar L. Feige]] examined the economic implications of a shift of economic activity from the observed to the non-observed sector of the economy. Such a shift not only reduces the government's ability to collect revenues, it can also bias the nation's information systems and therefore lead to misguided policy decisions. The book examines alternative means of estimating the size of various unobserved economies and examines their consequences in both socialist and market oriented economies.<ref name="feige">{{cite book|title=The Underground Economies:Tax Evasion and Information Distortion|last=Feige|first=Edgar L.|publisher=Cambridge University Press|year=1989}}</ref> Feige goes on to develop a taxonomic framework that clarifies the distinctions between informal, [[Crime|illegal]], unreported and unrecorded economies, and identifies their conceptual and empirical linkages and the alternative means of measuring their size and trends.<ref>{{cite journal|last=Feige|first=Edgar L.|date=December 11, 2003|title=Defining and Estimating Underground and Informal Economies: The New Institutional Economics Approach|journal=[[World Development (journal)|World Development]]|volume=18|issue=7|pages=989–1002|doi=10.1016/0305-750x(90)90081-8|s2cid=7899012}}</ref>
Since then, the informal sector has become an increasingly popular subject of investigation in economics, [[sociology]], [[anthropology]] and [[urban planning]]. With the turn towards so called [[Post-fordism|post-fordist]] modes of production in the advanced developing countries, many workers were forced out of their formal sector work and into informal employment. In a 2005 collection of articles, ''The Informal Economy. Studies in Advanced and Less Developed Countries'', the existence of an informal economy in all countries was demonstrated with case studies ranging from New York City and Madrid to Uruguay and Colombia.<ref name="portes">{{cite conference| last1=Portes| first1=Alejandro| last2=Haller|first2=William|year=2005|editor2=[[R. Swedberg]]|title=The Informal Economy| publisher=Russell Sage Foundation|editor1=[[N. Smelser]]|book-title=Handbook of Economic Sociology, 2nd edition}}</ref>
[[File:Black market in Shinbashi.JPG|thumb|Black market in [[Shinbashi]], Japan, 1946]]

An influential book on the informal economy is [[Hernando de Soto (economist)|Hernando de Soto]]'s ''El otro sendero'' (1986),<ref>{{cite book|title=El Otro Sendero|author=Hernando de Soto|publisher=Sudamericana|year=1986|isbn=978-950-07-0441-0}}</ref> which was published in English in 1989 as ''The Other Path'' with a preface by Peruvian writer [[Mario Vargas Llosa]].<ref name="path">{{cite book|title=The Other Path: The Economic Answer to Terrorism|author=Hernando de Soto|publisher=Harper Collins|year=1989|isbn=978-0-06-016020-3|url-access=registration|url=https://archive.org/details/otherpathinvisib00soto}}</ref> De Soto and his team argued that excessive regulation in the Peruvian and other Latin American economies forced a large part of the economy into informality and thus prevented economic development. While accusing the ruling class of 20th century [[mercantilism]], de Soto admired the entrepreneurial spirit of the informal economy. In a widely cited experiment, his team tried to legally register a small garment factory in Lima. This took more than 100 administrative steps and almost a year of full-time work. Feige's review of the Other Path places the work in the context of the informal economy literature.<ref>{{Cite journal|last=Feige|first=Edgar L.|date=1989|others=pp. 371–379|title=The Underground Wealth of Nations:Commentary on "The Other Path"|journal=The World and I|issue=June 1989}}</ref>  Whereas de Soto's work is popular with policymakers and champions of free market policies like ''[[The Economist]]'', some scholars of the informal economy have criticized it both for methodological flaws and normative bias.<ref>{{cite book|title=Planet of Slums|last=Davis|first=Mike|publisher=Verso|year=2006|location=London|pages=79–82}}</ref>

In the second half of the 1990s many scholars started to consciously use the term "informal economy" instead of "informal sector" to refer to a broader concept which includes enterprises as well as employment in developing, transition, and advanced industrialized economies.{{citation needed|date=April 2021}}

Among the surveys about the size and development of the shadow economy (mostly expressed in percent of official GDP) are those by Feige (1989), and Schneider and Enste (2000) with an intensive discussion about the various estimation procedures of the size of the shadow economy as well as a critical evaluation of the size of the shadow economy and the consequences of the shadow economy on the official one.<ref>{{Cite book|title=The underground economies: Tax evasion and information distortion|last=Feige|first=E.L.|publisher=Cambridge, UK: Cambridge University Press|year=1989}}</ref><ref>{{Cite journal|last1=Schneider|first1=F.|last2=Enste|first2=D.|date=2000|others=pp. 77–114|title=Shadow economies: Size, causes and consequences|journal=Journal of Economic Literature|volume=38|issue=38/1|pages=77–114|doi=10.1257/jel.38.1.77}}</ref> Feige's  most recent survey paper on the subject from 2016 reviewed the meaning and measurement of unobserved economies and is particularly critical of estimates of the size of the so-called shadow economy which employ Multiple Indicator multiple cause methods, which treat the shadow economy as a latent variable.<ref>{{Cite journal|last=Feige|first=Edgar L.|date=2016|title=The Meaning and Measurement of Unobserved Economies: What do we really know about the "Shadow Economy"?|journal=Journal of Tax Administration|issue=30/1}}</ref>