A Critical Evaluation of Romantic Depictions of the Informal Economy

Abstract

The conventional portrayal of the formal/informal economy dichotomy endows the formal economy with positive attributes and the informal economy with negative characteristics. Recently, this hierarchy has been inverted by scholars portraying the informal economy positively as a chosen alternative and path to progress. This paper evaluates critically this emergent representation. Reporting a study of the informal economy in the Ukraine conducted in 2005/2006, a diverse array of informal economic practices are identified that amongst some groups represent an involuntary means of livelihood but amongst others a chosen alternative and some of which seem beneficial and others deleterious to economic development and social cohesion. The outcome is a call to transcend simplistic binary hierarchical depictions of the formal economy as “bad”/informal economy as “good” (or the inverse) and towards a finer-grained and more nuanced understanding of the diverse forms of informal work and their varying consequences for economic development and social cohesion.

Keywords:

• informal sector
• underground economy
• economic development
• Ukraine
• post-socialist societies

Notes

The 25 domestic services investigated were: indoor painting; wallpapering; replacing a broken window; maintaining appliances; installing double glazing; plumbing; kitchen refurbishment; bathroom improvements; laying floor coverings; routine housework; cleaning the inside of windows; shopping; washing/ironing clothes; cooking; washing dishes; hairdressing; managing domestic financial affairs; making/repairing clothes; making/repairing curtains; making/repairing tools; making/repairing furniture; daytime childcare; evening childcare; tutoring and tending the sick.