Okuzeka
Economics vocabulary · Development and Inequality

Informal economy

Meaning in economics, with examples

nounCommon term

In economics, informal economy means: Economic activity that is not registered with or regulated by the state, such as unregistered workers and businesses that pay no tax or social security.

In Turkish: kayıt dışı ekonomi

How it is used

Also called the shadow economy, black economy or underground economy (some of these sound more negative). It matters in development economics because it is large in many middle- and low-income countries. Workers in the informal economy usually have no pension or health insurance.

Example sentences

  1. Nearly a third of workers are employed in the informal economy, without social security.

  2. Lower payroll taxes may encourage firms to bring workers out of the informal economy.

Common collocations

  • informal employment
  • informal sector
  • shadow economy
  • work in the informal economy
  • taxationThe system by which a government collects money from people and businesses through taxes on income, profits, spending and property.
  • labour marketThe market in which workers offer their time and skills and employers hire them, setting the level of employment and wages.
  • developing countryA country with a lower average income, less industrial output and weaker infrastructure than the rich industrialised countries.
  • unemploymentThe situation of people who have no job but are available for work and actively looking for one; also the number or share of such people.

More terms: Development and Inequality

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This page explains English vocabulary for learners. It is not financial advice.