Problematizing the “informal sector”: 50 years of critique, clarification, qualification, and more critique

Since its coining in 1971, the concept of the “informal sector” has been used to draw scholarly, political, and philanthropic attention to hundreds of millions of workers who lack basic labor protections. But as the term proliferated, so too did its detractors. Critics claim that the label of “informal” homogenizes the world's poor and distorts understandings of the sources of and solutions to their economic woes. What are the origins of the concept's contradictory nature? What strategies have scholars used to increase the likelihood that it will be used to illuminate and uplift, rather than to distort and denigrate? This article analyzes how scholars have resignified and retheorized the informal economy in response to five conceptual challenges: stigmatization, definitional fuzziness, homogenization, an either/or fallacy, and the presumption of “formalization” as the solution. Such efforts have preserved the concept's analytic potency and political relevance. In the longer term, however, a true testament to the concept's value would be if it outlives its own utility; that is, if it mobilizes enough recognition and resources to the invisibilized majority of the world's workers that scholars and state bureaucrats no longer feel the need to lump them together under a misleading catchall label.