**MONGOLIAS INFORMAL SECTOR** -

**Notes**

**56**

1 9.For simplicity, some categories were grouped together. For example, the Annual Labor Force Balance distinguishes between those who are watching children under three years old, those watching children greater than three years old, those caring for old people, and people who are not working because of a temporary illness. These were all grouped together in the informal sector surveys. Some categories in the Annual Labor Force Balance (e.g., "released from prison," and "because of the peculiarity of spouse's work") were omitted from the informal sector surveys because they consistently represent small fractions of the not-employed. However, survey respondent who selected the "other" category wrote a qualitative response, and whenever the explanation matched one of the omitted categories, the response was recoded. So, responses of "other" on the informal sector surveys mirror very closely the category of "without any reason" on the Annual Labor Force Balance.

# 20.The statistics quoted in this paragraph exclude moonlighters.

21 .Among the subset who report to the _duureglsoum_ that they are not employed, 20% to 30% say that the reason they provide is "other" which ultimately gets placed into the category "without any reason." It should also be noted here that 60-75% of the informals who consider themselves not-employed have never been registered at the ERO. This is appropriate, since they are clearly economically engaged, but it serves as further evidence that participants in Mongolia's informal sector are largely omitted from both employment and unemployment statistics.

22.References to the household survey refer to the months of October and November, 1996. "Formal Income" is defined to include wages and salaries, pensions and benefits, rental income, loan income, and aid. "Informal Income" is defined to include income from selling agricultural products and raw materials, income from selling non-agricultural individually made products, income from individual services, profit from trade, and other income. Note that this definition of informal income is different from that of "individual activities" used by the SSO in publications.

23.The reference to "unemployed people" in this section refers to "number of unemployed people whose age is possible for labor," question number 23 on the SSO Household Survey.

24.But as the latter estimate includes moonlighters, some of those counted here as "engaged in informal activity" are already considered employed in the official statistics. Excluding moonlighters and pensioners, it is estimated that informal employment is between 16% and 26% of Ulaanbaatar's officially recorded employment.

# 25.These estimates excluded pensioners.

26.1t should be noted that if one adjusted the estimate for taxicabs using the procedure outlined in Appendix B, then the estimated number of not-employed informals per employed informal would be higher. The range would be between 3 and 6 not-employed informal per employed informal, rather than the more conservative 2 to 6 presented in the text.

27.That is, it was assumed that each of the three types of informals surveyed is representative of some proportion of the population of informals in Ulaanbaatar. If each makes up no less that 20% or the population, then the range of possible values for the true mean of the overall population becomes 3 to 4.6.

28.One may argue that some of those seventeen thousand people are in fact not participants of the informal sector. However, several points need to be made. First, many studies in the literature on the informal sector consider the legal form of organization to be the most important defining characteristic of the informal sector; non-corporate forms of organization, for which there is a legal existence separate from the individuals, are part of the informal sector by definition. (See, for example, ILO 1993, p. 16.) In Mongolia, sole proprietorships are no longer being registered by the authorities as a legal form of organization. Sole proprietorships were registered under the _Economic Entities Law_ of 1991 (amended in 1993). But even then, the law maintained that sole proprietors were