Informal Employment in Developing Economies: Multiple Heterogeneity

This paper contributes to the literature on the nature of informal employment in developing economies. Drawing on the model with essential heterogeneity, it offers a list of scenarios describing the behavioural patterns which informal workers follow. The list nests not only classical patterns of a rationed formal sector versus an integrated labour market, but also different patterns of rationing. Using non-parametric techniques and data from a few African economies with different levels of development, the paper proposes empirical case studies fitting various informality schemes. Developing economies show disparate patterns of allocation of workers and various patterns of rationing.