New World Bank reading list: reducing informality

This new reading list surveys the various approaches to understanding informality and documents its causes and consequences. How and why do firms become ‘formal’? What, if anything, can or should policymakers do to encourage them? The best estimates we have suggest that over 30% of output and 70% of workers in developing countries are, to some degree, outside the scope of government regulation. This list also explores the relationship between formal and informal firms in developing countries and provides a framework for thinking about how government might persuade enterprises to formalize voluntarily.