In times of economic crisis, many families experience unemployment and job loss, forcing young people to supplement their parents` income by selling goods or services to contribute to the family economy. At its core, young people must compromise their social activities with other young people and prioritize their participation in the informal economy, thus creating a working class of young people who must assume an adult role within the family. Although it revolves around a negative stigma of deviation, for a majority of individuals, mostly people of color, the informal economy is not an ideal choice, but a necessity for survival. Participation in the informal economy will be normalized due to the lack of resources available in low-income and marginalized communities, and no matter how much they have to work, they will not move up the economic hierarchy. If a parent is unemployed or if his job is not in demand, he is forced to find other methods to take care of himself, but especially his children. However, due to all the limitations and lack of jobs, children end up cooperating with their parents and also work for the economic well-being of their families. By having to help provide for the family, children miss out on their childhood, because instead of participating in activities involving other young people of their age, they are forced to take on an adult role, put the family first and contribute to the well-being of the family. Workers in the informal economy have no say in government policy. [27] Not only is the political power of informal workers limited, but the existence of the informal economy also poses challenges to other politically influential actors. For example, the informal workforce is not part of a union and there does not appear to be any pressure or inclination to change this status. However, the informal economy has a negative impact on union membership and investment. Workers who could be formally employed and join a union for protection may instead choose to diversify.
As a result, trade unions tend to oppose the informal sector and point to the costs and disadvantages of the system. Producers in the formal sector may also feel threatened by the informal economy. The flexibility of production, the low labour and production costs and the bureaucratic freedom of the informal economy can be seen as constant competition for formal producers, leading them to challenge and reject this sector. After all, the nature of the informal economy is largely anti-regulatory and exempt from standard taxes, which reduces the material and political power of government agents. No matter how important these concerns may be, the informal sector can shift political power and energy. [27] According to a 2018 study on informality in Brazil, there are three points of view to explain the causes of informality. The first view holds that the informal sector is a reservoir of potentially productive entrepreneurs who are kept out of the formality by high regulatory costs, particularly access regulation. The second views informal forms as “parasitic forms” that are productive enough to survive in the formal sector, but choose to remain informal in order to reap higher benefits from the cost benefits of non-compliance with taxes and regulations. The third argues that informality is a survival strategy for low-skilled people who are too unproductive to become formal. According to the study, the first view corresponds to 9.3% of all informal forms, while the second is 41.9%. The remaining forms correspond to low-skilled entrepreneurs who are too unproductive to become formal.
The author suggests that informal forms are to a large extent “parasitic” and that their eradication (e.g. B through stricter enforcement) could have positive effects on the economy. [26] Emir Estrada and Pierrette Hondagneu-Sotelo visited predominantly Latino communities in Los Angeles, California, to observe the daily actions of street vendors. They analyse why adults participate in the informal economy. Although it revolves around a negative stigma of deviation, for a majority of individuals, the informal economy is not an ideal choice, but a necessary action for survival. While witnessing the constant struggle of Latinos to make ends meet and try to make money to put food on the table, they have seen how children`s participation benefits the family or even harms it. Through field notes derived from their participation, Estrada explains: “Children are not the `luggage` that adult immigrants simply bring. In the case of street vendors, we find that they also contribute to family processes.
[59] Estrada`s results show that children work to contribute to their household income, but above all, they play a crucial role when it comes to language barriers. Children are not just workers, they gain an understanding of how to run a business and a trade. Statistics on the informal economy are not reliable because of the topic, but they can provide a preliminary picture of its relevance. For example, informal employment accounts for 58.7% of non-agricultural employment in the Middle East and North Africa, 64.6% in Latin America, 79.4% in Asia and 80.4% in sub-Saharan Africa. [29] Including employment in agriculture, the percentages exceed 90% in some countries such as India and many sub-Saharan African countries. Estimates for developed countries are about 15%. [4] In recent surveys, the informal economy declined in many regions over the past 20 years until 2014. In Africa, the share of the informal economy has fallen to about 40% of the economy. [30] Some situations of informal work can be lucrative.
B for example, persons with skills who hire as consultants on a contractual basis at a high hourly rate, work remotely or enter the client`s business irregularly. These people decide when and where they want to work, and have often taken weeks or months off to take vacations or work on entrepreneurial projects. Some families create dual-income households by letting a partner work part-time while the children are in school. Historically, development theories have asserted that as economies mature and develop, economic activity will shift from the informal to the formal sphere. In fact, much of the discourse on economic development revolves around the idea that formalization indicates the development of a country`s economy; For more information about this discussion, see Budget Capacity. [61] However, there is evidence that the transition from the informal to the formal sector is not universally applicable. While the characteristics of a formalized economy – full employment and an extensive social protection system – have served as effective methods of organizing work and well-being for some nations, such a structure is not necessarily inevitable or ideal. In fact, development in different places, regions and nations, as well as in the type of work practiced, seems to be heterogeneous.
[3] [61] At one end of the spectrum of the type of work done in the informal economy are, for example, small businesses and manufacturing; on the other hand, “street vendors, shoe shiners, scrap metal collectors and domestic workers.” [3] Whatever the evolution of the informal economy, its continued growth cannot be considered a temporary phenomenon. [3] This view is naïve, because in regressive regimes such as Cuba, North Korea, and the former Soviet Union – all communist (left))-wing economies—the informal sector known as the black market is massive and represents an important and vital part of their economies. Estimating the size and development of an underground or underground economy is a rather difficult task, as participants in such economies try to hide their behavior. Great care must also be taken to distinguish between trying to measure the undeclared economy, which is generally associated with tax evasion,[31] or the unregistered or unobserved economy,[32] which is associated with the level of income that is easily excluded from national income, and to create accounts because of the difficulty of measuring. There are many estimates of tax non-compliance, as measured by tax gaps created by verification methods or by “top-down” methods[33]. Friedrich Schneider and several co-authors[34] claim to have estimated the size and trend of what they call the “underground economy” worldwide through a currency demand model/MIMIC approach that treats the “underground economy” as a latent variable. Trevor S. . .
.