<p>Three part answer:</p>

<p>Causes:</p>

<ul>
<li>Trust in the system (particularly trust in politics)</li>
<li>Attitudes to risk (i.e. being caught)/Enforceability of regulatory power</li>
<li>Education levels</li>
<li>Economic empowerment/unemployment/low wage level</li>
<li>Law of unintended consequences </li>
<li>Cultural considerations</li>
<li>Geographical considerations</li>
</ul>

<p>Reduction:</p>

<ul>
<li>Political corruption cleansing</li>
<li>Tighter regulation on informality </li>
<li>Greater communication and transparency</li>
<li>Demand and supply side policies</li>
</ul>

<p>Evaluation:</p>

<ul>
<li>Extent to which informality is a problem</li>
<li>'Trickle-down' effects</li>
<li>Ease in assessing magnitude of informality </li>
</ul>

CC BY-SA 3.0
2016-07-29T14:54:42.080Z
I think these all look like potentially important parts of the answer. Please elaborate: how is the law of unintended consequences related to this issue? How is greater communication and transparency related to this issue?
Fix.B.
CC BY-SA 3.0
2016-07-29T15:10:45.460Z
Unintended consequences occur with all policies, i.e. imposition of tax leads to people not wanting to pay it, this is a rather general point but is relevant with respect to policies to reduce informality. With respect to transparency and communication, these develop trust and allow agents to be more informed of proceedings within the formal economy i.e. Prime Minister's Questions (UK)
Hero123
CC BY-SA 3.0
2016-08-03T23:22:02.430Z
*tax avoidance/evasion
Hero123
CC BY-SA 3.0
2016-07-28T22:09:59.240Z
2016-07-28T22:09:59.240Z
Hero123
<p>Increasing the amount of government paperwork (Tax forms, Licensing etc.)  that is required to be filled out by a given firm in the industry in question, government inspection of work sites and an overall investment in the portion of the police force that handles civil law would seem to be the solution.</p>

<p>This is what will make these industries formalised as they are now monitored by a government that will take action (ideally) when there is an issue.</p>

CC BY-SA 3.0
2016-08-28T05:03:55.963Z
Doesn't increasing the amount of paperwork **increase** the incentives to informality?
410 gone
CC BY-SA 3.0
2016-08-28T14:35:30.283Z
True, but if there is development  of police force and Civil enforcement alongside it, (as an armchair policy maker)  it can work.
EconJohn
CC BY-SA 3.0
2016-08-28T02:41:10.753Z
2016-08-28T02:41:10.753Z
EconJohn
<p>It seems that lots of informality, ie. people or firms that exist without being part of the tax, health, legal, regulatory systems, is one of the main issues to deal with in developing economies or poor parts of developed economies. Is there some sort of consensus on how to reduce informality?</p>

<informality>
What do people think are good economic policies to reduce informality?
Fix.B.
# What do people think are good economic policies to reduce informality?

(Asked by: username_0 on 2016-07-22)

It seems that lots of informality, ie. people or firms that exist without being part of the tax, health, legal, regulatory systems, is one of the main issues to deal with in developing economies or poor parts of developed economies. Is there some sort of consensus on how to reduce informality?

**Tags:** informality

---

## 2 answers

### Answer by username_1 on 2016-07-28. Score: 1

Three part answer:

Causes:

* Trust in the system (particularly trust in politics)
* Attitudes to risk (i.e. being caught)/Enforceability of regulatory power
* Education levels
* Economic empowerment/unemployment/low wage level
* Law of unintended consequences
* Cultural considerations
* Geographical considerations

Reduction:

* Political corruption cleansing
* Tighter regulation on informality
* Greater communication and transparency
* Demand and supply side policies

Evaluation:

* Extent to which informality is a problem
* 'Trickle-down' effects
* Ease in assessing magnitude of informality

> **Comments:**
> **username_0**: I think these all look like potentially important parts of the answer. Please elaborate: how is the law of unintended consequences related to this issue? How is greater communication and transparency related to this issue?  
> **username_1**: Unintended consequences occur with all policies, i.e. imposition of tax leads to people not wanting to pay it, this is a rather general point but is relevant with respect to policies to reduce informality. With respect to transparency and communication, these develop trust and allow agents to be more informed of proceedings within the formal economy i.e. Prime Minister's Questions (UK)  
> **username_1**: *tax avoidance/evasion  

---

### Answer by username_2 on 2016-08-28. Score: 0

Increasing the amount of government paperwork (Tax forms, Licensing etc.) that is required to be filled out by a given firm in the industry in question, government inspection of work sites and an overall investment in the portion of the police force that handles civil law would seem to be the solution.

This is what will make these industries formalised as they are now monitored by a government that will take action (ideally) when there is an issue.

> **Comments:**
> **username_3**: Doesn't increasing the amount of paperwork **increase** the incentives to informality?  
> **username_2**: True, but if there is development  of police force and Civil enforcement alongside it, (as an armchair policy maker)  it can work.  

---

