This paper look sin to different theoretical and empirical literature concerning the trends of informal economy, segmentation and differentiation within informal economy and ways in which informal economy is segmented, ways of measuring informal economy, and the size and significance of informal economy.
A strong effort is made to get vast recent empirical evidence regarding the size and significance of informal economy and differentiation and segmentation within it in Addis Ababa. Based on this concept, the level of informality in Addis Ababa is measured and informal economy appears to be a vast sector, with low value added and limited innovation and dynamics. In fact, value added has reduced over time. For most, it offers a quality of life far below that of the formal sector.
Table of Contents
1. Introduction
2. Trends of Informal Sector in the World
3. Segmentation within the Informal Economy
4. Differentiation within Informal Economy
5. How Informal Economies are Measured?
6. Conclusion
Objectives and Topics
The primary objective of this work is to provide an empirical analysis of the informal economy in Addis Ababa, focusing on its size, significance, and the inherent differentiation and segmentation within the sector. It examines how informal activities are categorized and measured, while identifying the challenges associated with formalizing informal economic actors in the urban landscape.
- The theoretical and practical trends of the informal sector worldwide.
- Methods for measuring the scale and development of the informal economy.
- Segmentation based on employment status and poverty risk.
- The unique socio-economic challenges of informal business in Addis Ababa.
- Policy implications for integrating informality into the urban fabric.
Excerpt from the Book
4. Differentiation within Informal Economy
There is differentiation within informal economy among different groups engaged in informal sector. According to Chen (2007, p 8) informal economy can be differentiated by sex. Informal employment is generally a larger source of employment for women than for men in the developing world. Other than in the Middle East and North Africa, where 42 per cent of women workers (and 48% of male workers) are in informal employment, 60 per cent or more of women non-agricultural workers in the developing world are informally employed. Among non-agricultural workers, in sub-Saharan Africa, 84 per cent of women workers are informally employed compared to 63 per cent of men workers; in Latin America, 58 per cent of women workers compared to 48 per cent of men; and in Asia, 73 per cent of women workers compared to 70 per cent of men workers.
When the differentiation of male and female employment is compared based on the employment status segmentation available evidence from several developing countries suggests that relatively high shares of informal employers are men and relatively high shares of industrial outworkers are women. In short, men tend to be over-represented in the top segments of the informal economy; On the contrary, women tend to be over-represented in the bottom segment; and the relative shares of men and women in the intermediate segments vary across sectors and countries (Chen, 2007, p. 9). In Addis Ababa, surprisingly large group of those in informal employment are domestic employees, generally women (81%) working in what is termed elementary occupations (88%) (CSA, 2005 as cited in Fransen & Dijk, 2008, p. 8). This is a vulnerable group, at the mercy of the household for which they work, with relatively high rates of abuse and violence (Fransen & Dijk, 2008, p. 8).
Summary of Chapters
1. Introduction: Presents the theoretical scope of the review and acknowledges the scarcity of recent empirical data on the informal economy in Addis Ababa as a primary research challenge.
2. Trends of Informal Sector in the World: Discusses the shifting global perspective of the informal economy from a "fading tradition" to a persistent, essential contributor to modern employment and GDP.
3. Segmentation within the Informal Economy: Explains how the informal labor force is segmented based on employment status, distinguishing between self-employed entrepreneurs and vulnerable wage workers.
4. Differentiation within Informal Economy: Analyzes the variations within the sector caused by gender disparities, earnings differentials, and differing levels of poverty risk.
5. How Informal Economies are Measured?: Outlines the primary analytical approaches—direct, indirect, and model-based—used to quantify the size and economic impact of informal activities.
6. Conclusion: Synthesizes the findings, arguing that forced formalization is often ineffective and that policy should focus on social support and improving market accessibility for informal actors.
Keywords
Informal Economy, Segmentation, Differentiation, Addis Ababa, Employment Status, Labor Market, Exclusionary Informality, Voluntary Informality, Poverty Risk, Urban Development, Formalization, Economic Growth, Informal Enterprises, Wage Workers, Socio-economic Policy
Frequently Asked Questions
What is the core focus of this research?
The research examines the nature of the informal economy, specifically looking at how it is defined, segmented, and measured, with a particular case study on the urban context of Addis Ababa.
What are the primary themes covered in the study?
Key themes include the global trends of informal labor, the segmentation of the workforce by status and gender, the methodologies for estimating the size of the sector, and the socio-economic implications of informality.
What is the central research question?
The work aims to understand the scale and significance of the informal economy in Addis Ababa and analyze how differentiation and segmentation within this sector influence its development and potential for formalization.
Which scientific methods are utilized for this analysis?
The study relies on a review of existing theoretical and empirical literature, utilizing secondary data and statistical reports from international organizations and local Ethiopian authorities.
What is addressed in the main body of the text?
The main body investigates the segmentation of informal labor, compares the characteristics of exclusionary versus voluntary informality, and explores the difficulties in regulating this fluctuating market.
Which keywords best characterize this work?
Essential keywords include Informal Economy, Segmentation, Differentiation, Addis Ababa, Exclusionary Informality, and Urban Development.
Why is formalization difficult to implement in Addis Ababa?
Formalization is often unfeasible because many informal operators lack the financial resources to meet formal standards, and the formal market often fails to provide the necessary infrastructure or support they require.
How does the informal economy differ by gender?
The study notes that women are often over-represented in the bottom segments of the informal economy, such as domestic service and elementary occupations, while men are more frequently found in higher-tier, self-employed roles.
What is the difference between exclusionary and voluntary informality?
Exclusionary informality is driven by poverty and a lack of access to formal opportunities, whereas voluntary informality involves choices by entrepreneurs to operate informally to evade excessive bureaucracy and taxes.
- Quote paper
- Emebet Hailemichael (Author), 2019, How to Manage Informal Economy in Ethiopia? Differentiation Within the Informal Economy in Addis Ababa, Munich, GRIN Verlag, https://www.grin.com/document/916263
