## **2. South Asia**

More and Better Jobs in South Asia (World Bank, 2012), based on a survey of 26,000 firms, does not explicitly study the informal sector, but acknowledges that the vast majority of jobs are in the informal sector, as will be the vast majority of new job creation. It confirms for South Asia results observed elsewhere in the informal sector, namely that access to credit is a relatively lower priority than is access to infrastructure and dealing with the corruption infesting relations with public utilities and tax services. It also favors an education and skills agenda with a view to protecting workers rather than protecting jobs through regulations, given that formal private sector wage jobs are available to very few.

## **3. Rural-urban migration and informal employment**

Rural – urban migration is one of the most important determinants of the rise of informal labor force in the developing world. Becker (2007) documents the magnitudes of such internal migration trends in developing countries and finds them to be astonishingly high in some instances. For Africa, Kessides (2005) finds that urban population growth has almost doubled in 15 years, mostly due to such migrations. ‘Despite the existence of positive marginal products in agriculture and significant levels of urban unemployment, rural-urban labor migration not only continues to exist, but indeed, appears to be accelerating.’ (Harris and Todaro, 1970) In the classic Harris and Todaro (1970) model, the informal sector is the main refuge for the urban unemployed and the host of the newly arriving rural migrants on their way to the formal sector jobs. Using an improved version of the same model, Bhattacharya (2002) emphasizes: ‘the Informal sector is not primarily a transit camp for disappointed migrants queuing for formal sector jobs, but a dynamic sector making substantial contributions to income and output, capable of attracting and sustaining labor in its own rights’.

Urbanization and informality have been studied in India (Urbanization and Informalization by Ejaz Ghani and Ravi Kanbur, World Bank, 2013) and in South Africa, Cornwell and Inder (2004), Asfaha, and Jooste, (2006), de Haan, Kirsten, and Rwelamira (2003)<sup>5</sup> , but is largely understudied elsewhere.

# **B. Informal trade**

Like much informal economic activity, informal trade is not easy to define with precision, since practices differ from one border to the other. In general, informal trade is defined as the international flow of goods that are unreported or incorrectly reported by the country's customs authorities. This includes trade in goods passing through border posts with false customs declarations as well as goods that cross the border without the knowledge of customs authorities, either through border posts or elsewhere along the border. (Ayadi et al, 2013) And while foreign trade always involves movements of goods and services across international borders, informal cross-border trade (ICBT) is more narrowly defined as the flow of goods and services across the international land borders between neighboring countries. Its unique feature is that very close geographical proximity renders transportation cost immaterial allowing those who are able to cross borders regularly to take advantage of differences in the supply, demand and price of various goods and services available on either side of the border.

> 5 See also : “Youth Employment in Sub-Saharan Africa,” D. Filmer and L. Fox, editors, World Bank, 2014.

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