the informal firms in order to provide comparator statistics on important variables, such as productivity. If informality is defined as a continuum of characteristics, a control group of formal firms is even more important.

These approaches, of course, may vary by type or income level of the country and estimated share of the informal economy. As a single example, Benjamin and Mbaye (2012) working in West Africa drew samples from official firm registries and tax rolls, and from micro and small informal enterprises identified in 1-2-3 household surveys, while stratifying for large informal firms, which were known to be influential.

Beyond surveys, other resources include the Schneider Index: This country-level index draws on primary data sources listed above. It estimates the share of an economy’s total production that is not declared to tax and regulatory authorities. This apparently combines the activities of informal firms and informal activity conducted by formal firms. So while providing a quick estimate of the informal share of the economy, it does not provide information on sectors, firms, employment or firm behavior.

# **IV.  Qualitative data and the policy agenda**

Many firm surveys ask respondents to choose the greatest constraints they face in business from a proposed list of constraints, or to assign priorities to a proposed list of issues. This provides a way of quantifying data on opinions. Still, the responses do not tell us how a given issue is a constraint, how it affects business, or how they might respond if policies were changed. Interviews and other forms of qualitative data can help uncover the story that provides clues on these points, which are of great importance for policy development.

## **A. Interviews with major players**

The most important and basic information to collect about the informal sector is to learn how this important segment of the economy works. Surveys based on an extensive sample frame as described above can provide data that will allow comparison of different types of informal and formal firms regarding productivity, competitiveness, technology, skills, jobs and income, inclusion of disadvantaged groups, credit, trade, and priority issues.

However, studies of the informal sector have benefitted much from combining quantitative and qualitative data. For example, even surveys of informal firms that offer ‘pick lists’ of constraints do not provide the full story of what needs to be changed in order to promote better performance of informal firms, better survival of firms and better job creation. What is critical is to gain an understanding of how firm managers perceive the institutional context and how the system works. Qualitative interviews with major players and government officials can help characterize the informal economic system identify critical issues and how participants perceive the regulatory environment. Major players can include directors of important firms, both formal and informal; representatives of labor groups; leaders of organizations representing informal businesses; leaders of ethnic or family business networks; and other civil society groups. Government officials should include tax and customs officials as a minimum.

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