Re-Thinking the Nature of the Informal Economy: Some Lessons from Ukraine

Abstract

This article provides a critical evaluation of the competing discourses that variously represent the informal economy as a residue or leftover of some pre-capitalist era, a by-product of a new type of emergent formal economy, an alternative mode of work organization or a complement to the formal economy. Drawing upon evidence from a study of 600 households in Ukraine that unravels the heterogeneous forms of work in the informal economy, the finding is that although each and every representation is wholly valid in relation to specific types of informal work, no one articulation fully captures the diverse nature and multiple meanings of the informal economy. Here, in consequence, it is contended that only by using all of them will a finer-grained and more comprehensive understanding of the complex and multifarious character of the informal economy be achieved. To display how this can be achieved, a conceptual framework is then presented that couples together these contrasting representations in order to provide a more multi-layered and nuanced depiction of the informal economy, followed by a discussion of the implications for urban and regional development and policy of recognizing the multiple and diverse types of informal work.

Keywords: Informal sector, household work practices, livelihoods, economic development, Ukraine, post-socialist societies

JEL Classification: H26, J46, J48, K34, K42, O17, P2, P3