Question

why do you think formal sector is turning to informal sector​

Answer 1

Answer:

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• limited absorption of labour, particularly in countries with high rates of population or urbanisation.
• excessive cost and regulatory barriers of entry into the formal economy, often motivated by corruption.
• weak institutions, limiting education and training opportunities as well as infrastructure development

Answer 2

Answer:

Some people are self-employed in the informal sector because they want to avoid registration and taxation. But many people work in the informal sector through necessity, not choice. Today, there are two features of the informal sector that are well-recognized. Firstly, much of the informal economy contributes greatly to the formal economy. Secondly, women constitute the majority of precarious, under-paid, informal workers.

Why are informal working systems so prevalent? The thinking during the 1950-60s was that with coherent economic policies and good institutions, low-income countries with traditional economies could be transformed into robust modern economies. Small scale enterprises and casual workers would be smoothly absorbed into the modern, formal economy, swallowing the surplus labor from the traditional economy. At this point wages would begin to rise from subsistence level (as proposed most famously by Nobel Prize winner Arthur Lewis). However, by the mid-1960s, the developing world came to believe that widespread unemployment and under-employment was here to stay. This was seen in the high levels of casual, intermittent employment, and was partly driven by the adoption of labor-saving technology.

Explanation:

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