Informal Economy

Generally speaking, the term “informality” refers to practices that take place outside official regulation and formal state sanction. Urban informality—especially in the spheres of housing and work—has long served as a touchstone in debates in urban studies and has long been a focal point in scholarly research about livelihoods and income generation, poverty, social exclusion and marginalization, land rights, and self-provisioned shelter. Despite its indispensability for understanding how those without formal employment “get by” in urban settings, how urban dwellers “house themselves,” and how governance systems evolve outside of state regulation, informality remains a notoriously slippery term that defies simple classification. Until recently, conventional scholarly research and writing primarily structured debates on formality and informality along the dichotomous divisions between regular/irregular, regulated/unregulated, visible/invisible, or legal/illegal distinctions, where state regulation and the law defined what was formal, and everything outside of this terrain constituted “informality.” Yet in the early twenty-first century, a growing number of scholars have challenged this conventional conception of informality and formality as opposing or even mutually exclusive domains of social practice. These scholars have suggested that formality and informality should be understood as markers along a continuum rather than polar opposite end-points.