Public policies promoting the informal economy: effects on incomes, employment and growth in Burkina Faso

Since the 1990s, Burkina Faso has intensified the implementation of supporting policies to enhance the access to capital and liquidity in the informal economy. This paper analyzes the effects of these policies on incomes, employment and economic growth by taking into account the interactions between the informal sector, the formal sector and the agricultural sector. For that purpose, policy shocks are simulated through the Partnership for Economic Policy Network’s static computable general equilibrium model which is adapted to the structure of a 2008-based social accounting matrix developed by the International Food Policy Research Institute. Our results highlight mixed effects including a paradoxical contraction of the informal sector, the formal sector and economic growth as well as an improvement of the informal households and the farmers’ incomes