Difficulty in finding employment in the formal sector is commonplace in low-income countries, where informal businesses employ a large share of the workforce and provide livelihoods for the poor. Theory suggests that informal sector workers might transition to the formal sector as low-income economies develop. By examining Vietnam’s economic expansion and response to new export opportunities, our recent research sheds more light on patterns of individual transitions from the informal to the formal sector in low-income countries and the possible effect on aggregate productivity.
GLM|LIC Policy Brief No. 4