The Informal Economy in South Africa: Debates, Issues and Policies

The idea of dualism in the South African economy, characterised by a ‘first’ and ‘second’ economy, has come to dominate government thinking in recent years. Using the panel component of the Labour Force Survey (LFS), we explore linkages between the formal and informal economy. Our analysis suggests...

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Bibliographic Details
Published in:Margin : the journal of applied economic research 2012-05, Vol.6 (2), p.133-157
Main Authors: Valodia, Imraan, Devey, Richard
Format: Article
Language:English
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Summary:The idea of dualism in the South African economy, characterised by a ‘first’ and ‘second’ economy, has come to dominate government thinking in recent years. Using the panel component of the Labour Force Survey (LFS), we explore linkages between the formal and informal economy. Our analysis suggests that there is a high level of interaction between formal and informal work at the lower end of the labour market. At the household level too, access to stable employment in the formal economy is associated with higher levels of earning in the informal economy. Our findings have implications for poverty analysis in South Africa. Policy which views poverty as being located outside the mainstream of the economy—in the so-called ‘second economy’—is misleading. JEL Classifications: O17, O55
ISSN:0973-8010
0025-2921
0973-8029
DOI:10.1177/097380101200600203