econ informal sector

• Informal Sectors


  • Parallel market
  • Hidden economy
  • Invisible economy
  • Shadow economy
  • Submerged economy
  • Underground economy
• Informal Sector Characteristics


  • Independent, self-employed producers
  • Operate with very little capital
  • Utilize low level of technology and skills
  • Low income and unstable employment
  • Unregistered and unrecorded
• Reasons for Informal Sector

  • Uneven economic development (factors: poverty rate, employment rate, literacy rate)
  • Lack of willingness to comply with the law (avoid taxes, avoid government checks)
  • Illegal Trade (organs, animals, counterfeit products, wildlife poaching and trafficking)
  • Exploitation and Abuse (child labor, human trafficking)
• Institutions and Programs


  • Balik Probinsya, Bagong Pag-asa Program
  • SCIS- Sub-committee on Informal Sector
  • DILEEP- DOLE Integrated Livelihood and Emergency Program
  • CLPEP- Child Labor Prevention and Elimination Program
  • RA 8425- Social Reform Policy Alleviation Act
  • RA 8282- Social Security Act
  • RA 7796- Technical Education and Skills Development Act
  • RA 7875- National Health Insurance Act
• Ineffective law implementation
• Informal Employment in the Formal Sector


  • Failure to declare the occupation of workers
  • Insufficient working hours and wage compared to what had been declared
• Types of Informal Sector

  • Small Scale (sari-sari store owner, newspaper vendor, pedicab driver)
  • Medium-Tier (unregistered food kiosk and resto, local services)
  • Homeworker (unregistered online jobs, home business, online selling)
  • Black Market (drug trafficking, smuggling, prostitution, illegal gambling)
• Importance of Informal Sector


  • Helps in Production
  • Employment Generation
• Informal sector terms


  • parallel market
  • hidden economy
  • invisible economy
  • shadow economy
  • submerged economy
  • underground economy
• Independent, self-employed producers


  • Utilize low level of technology and skills
  • Operate with very little capital
  • Low income and unstable employment
  • Unregistered and unrecorded
• Uneven economic development
• Lack of willingness to comply with the law
• Ineffective law implementation
• Informal sector


  • Not employed in the formal sector
  • Company or workers are not registered
  • Business is not a legal entity
  • Disorganized and has few workers
  • Informal employment in the formal sector
• Informal sector components


  • Small scale (sari-sari store owner, newspaper vendor, pedicab driver)
  • Medium-tier (unregistered food kiosk and resto, local services)
  • Homeworker (unregistered online jobs, home business, online selling)
  • Black market (drug trafficking, smuggling, prostitution, illegal gambling)
• Informal sector helps in production
• Informal sector provides employment generation
• Informal sector has economic issues
• Wildlife poaching is the illegal capturing of animals
• Wildlife trafficking is the selling of animals illegally
• Child labor deprives children of their childhood, potential and dignity, and is harmful to their physical and mental development
• Child labor interferes with schooling by depriving them of the opportunity to attend, obliging them to leave prematurely, or requiring them to combine school with excessive work
• Human trafficking is the recruitment, transportation, transfer, harboring or receipt of people through force, fraud or deception, with the aim of exploiting them for profit
• Institutions and programs


  • Balik Probinsya, Bagong Pag-asa Program
  • SCIS
  • DILEEP and Emergency Employment Program
  • Sub-committee on Informal Sector
  • RA 8425 - social reform and POVERTY ALLEVIATION ACT
  • RA 8282 - SOCIAL SECURITY ACT
  • CLPEP -Child Labor Prevention and Elimination Program
  • RA 7797 - TECHNICAL EDUCATION AND SKILLS DEVELOPMENT ACT
  • RA 7875 -NATIONAL HEALTH INSURANCE ACT
• Causes of foreign trade
• Causes of foreign trade
• Absolute Advantage


  Can produce a product more efficiently than other countries
• Adam Smith: '"You don't have to produce everything"'
• Comparative Advantage


  Best option given a trade-off, meaning the one with least opportunity cost
• Factor Abundance


  A country has comparative advantage in the goods for which the required factors of production are abundant locally
• If a country has lots of labor, it should produce labor-intensive goods. If it has lots of capital, it should produce capital-intensive goods.
• Effects of foreign trade

  • Lowering of price because of competition
  • Innovation and transfer of technology
  • Breaks domestic monopolies
  • Employment generation
• Negative effects of foreign trade

  • Industries do not get a chance to grow because of competition
  • Risk of losing jobs
  • Diversity output may suffer as local producers leave the market
• Balance of trade


  Difference between the monetary value of exports and imports within a given period of time
• Philippines as of February 2023: Exports 5.1B USD, Imports 9B USD, Trade deficit 3.9B USD
• Trade barriers


  • Natural
  • Cultural
  • Policy
• Tariff


  Taxes imposed by a government on imports and export of goods
• Quota


  Imposes a limit on the number or the value of a product
• Standard


  Policies on product standard for quality, safety, and health
• Embargo


  Restricts commerce with a specified country or the exchange of specific goods