What is it about?

This paper shows quantifies the interaction between formal and informal sectors. We also present dynamic simulations to show the effect/contribution in terms of revised GDP per capita if the informal sector is accounted for in official statistics.

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Why is it important?

The informal economy is difficult to measure and has policy implications since it works in parallel to official sector but outside the legal umbrella.


It is necessary for economic and social policy design to account for informal sector size and its dynamics. Otherwise any policy may have unexpected results, especially if the informal economy is large.

Dr. Khurrum Shahzad Mughal

Read the Original

This page is a summary of: How Informal Sector Affects the Formal Economy in Pakistan? A Lesson for Developing Countries, South Asian Journal of Macroeconomics and Public Finance, January 2020, SAGE Publications,
DOI: 10.1177/2277978719898975.
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