Female Participation in the Informal Economy: A Neglected Issue

Abstract

The author examines three questions: how much females participate in the informal economy; why they participate; and what the policy implications of their participation are. In the process of examining these issues, the author develops a behavioral theory of female participation, involving exit, voice, loyalty, and dual loyalty, following Hirschman's work. Using three measures—the number of individuals; the amount of time; and dollars—she finds that women participate in the informal economy as much as, and probably more than, men do. In the course of trying to explain why females participate in the informal economy, she discusses a variety of different explanations and then rejects them because they are too value laden and/or they make too many assumptions. Finally, she discusses the policy implications of more and more women having dual loyalty, such as the need for government-regulated, safe day care, and the need for revising the definition of labor force participation to reflect some of the informal activity of women.

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