Informality and Social Protection: Preliminary Results from Pilot

There is a wide agreement on the fact that a large informal economy leaves many individuals without social protection and reduces government’s tax revenue and social security contributions. However, it remains an open question what really drives informality, namely whether workers are simply trapped out of the formal sector or, at least some of them, chose it because it offers better alternatives than a formal job. The policy implications are clearly different in the two cases. In order to shed light on this important issue, we propose a household survey instrument to assess the links between informality and social protection. It can be implemented either through a stand-alone survey or by adding a specific module to an existing general survey such as the World Bank’s Living Standards Measurement Study. After describing the main survey instrument, we present the results of two pilot surveys, carried out in Bulgaria and Colombia, to test the effectiveness of the questionnaire and improve its design. ∗ Very preliminary. The research on which this paper is based was conducted as part of a joint HDNSP, PREM, DEC project “Understanding the causes and consequences of informal and low quality employment”. We than