Informality in Indonesia

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dc.creatorHapsari, Indira Maulani
dc.creatorYu, Shu
dc.creatorPape, Utz Johann
dc.creatorMansour, Wael
dc.date2023-10-09T21:20:45Z
dc.date2023-10-09T21:20:45Z
dc.date2023-10-09
dc.date.accessioned2026-07-01T00:32:02Z
dc.descriptionInformality is a multidimensional development challenge with features that potentially differ across workers, firms, and countries. This paper first briefly summarizes the literature, discusses the multiple existing definitions of informality, and adapts the cross-country analytical framework on informality to the context of Indonesia. It then uses several novel datasets and a range of modeling approaches to capture the levels and trends of both output and employment informality in Indonesia. It further contributes to the existing literature by estimating informality in Indonesia at the regional, provincial, and sectoral levels. Those estimates were then benchmarked to the levels, trends, and features of the informal sector in emerging markets and developing economies to examine whether the major features of the informal sector in Indonesia deviate from those observed in other emerging markets and developing economies. The paper finds that despite the declining trend, both output and employment informality remain elevated and broadly above the comparator countries in the region. Informality in Indonesia is mostly concentrated in agriculture and low-skilled services and is associated with higher poverty at the provincial level. There also appear to be productivity, education, and salary gaps between formal and informal workers. Moreover, markets are not segregated as informal firms compete strongly with formal ones. Finally, informality seems to pose macroeconomic challenges as tax efforts and financial sector depth remain below the averages for emerging markets and developing economies.
dc.formatapplication/pdf
dc.formattext/plain
dc.identifierhttp://documents.worldbank.org/curated/en/099418010062356392/IDU0ce985e5e012dd046690856a0e803b1c7fe43
dc.identifierhttps://openknowledge.worldbank.org/handle/10986/40440
dc.identifier10.1596/1813-9450-10586
dc.identifier.urihttp://hdl.handle.net/123456789/405497
dc.languageEnglish
dc.languageen
dc.publisherWorld Bank, Washington, DC
dc.relationPolicy Research Working Papers; 10586
dc.rightsCC BY 3.0 IGO
dc.rightshttps://creativecommons.org/licenses/by/3.0/igo/
dc.rightsWorld Bank
dc.subjectINFORMALITY
dc.subjectGROWTH
dc.subjectEMPLOYMENT
dc.subjectMACROECONOMICS
dc.subjectCROSS-COUNTRY INFORMALITY ANALYSIS
dc.subjectAGRICULTURAL INFORMALITY
dc.titleInformality in Indonesia
dc.titleLevels, Trends, and Features
dc.typeWorking Paper

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