The Informal Economy: Thumbnail History of the Concept

1950s +1960s: widely-held notion that industrialization would lead to demise of traditional/marginal activities – W. Arthur Lewis’ Nobel Prize-winning essay on structural dualism in labour markets with surplus labour

early 1970s: recognition of persistence of traditional activities – coining of “informal sector” term – Keith Hart study in Ghana + ILO World Employment Mission to Kenya

late 1970s + early 1980s:  different theories of the informal sector/economy: dualist, structuralist, legalist, voluntarist

late 1980s + early 1990s:  popularity of Hernando de Soto and his theory (deregulation, de-bureaucratization, privatization, and property rights for informal real estate)

late 1990s: renewed interest in informal sector due to its persistence, even with economic development, and its growth, especially during economic crises of late 1990s

>2000:  growing popularity and rethinking of concept, accelerated during recent economic crises