The COVID-19 pandemic yet again exposed the vast divide in working conditions across Latin America. Many governments struggled to provide social assistance and employment relief to workers and businesses without formal documents (Blofield et al. Reference Blofield, Giambruno and Filgueira2020; Filgueira and Blofield Reference Filgueira and Blofield2020; Hummel et al. Reference Hummel, Michael Touchton, Velasco Guachalla, Nelson-Nuñez and Boulding2021). The pandemic response brought to the fore old questions: Who is informal and for what purposes? How do informal workers make claims on the state? And what explains the enduring divides in Latin American labor markets?
Contemporary scholarship has moved away from understanding informality as a pure result of economic conditions. In the 1990s, conventional wisdom was that labor informality resulted from market and state reforms. Debt crises expanded the ranks of informal workers. As economies opened, states reduced labor regulation, and macroeconomic conditions stabilized, economists expected labor informality to decrease (e.g., Loayza and Rigolini Reference Loayza and Rigolini2006, Reference Loayza and Rigolini2011; De Paula and Scheinkman Reference De Paula and Scheinkman2007; Perry Reference Perry2007; De Soto and Ghersi 1989). Yet by the 2000s, it became clear that labor informality was an enduring feature of labor markets in Latin America and beyond.
Political scientists turned their attention to the political and institutional conditions that perpetuate informality, for several reasons (see Altamirano, Berens, and Deeg this issue; Rosaldo this issue). First, as countries democratized, politicians needed to court the votes of informal sector workers (Baker and Dorr this issue; Feierherd Reference Feierherd2021; Holland Reference Holland2017). Decentralization allowed local governments leeway to regulate informal activities and enforce laws differently from national governments. Many local politicians staked out different and innovative approaches (Amengual Reference Amengual2015; Holland Reference Holland2015; Hummel Reference Hummel2017; Toledo Orozco this issue). Second, governments took new steps to include labor market outsiders in social programs. Noncontributory pensions and health care spread across the region, raising questions about the determinants and consequences of greater social policy inclusion (Garay Reference Garay2016; Holland and Schneider 2017; Hunter and Brill Reference Hunter and Brill2016; Hunter and Sugiyama 2009; Levy and Schady Reference Levy and Schady2013).
Third, new forms of participation and organizing emerged. While traditional party system and union linkages collapsed in many countries, new associations and participatory institutions emerged (Collier and Handlin Reference Collier and Handlin2009; Holland this issue; Rich et al. Reference Rich, Mayka and Montero2019). Questions arose about the role of informal workers in supporting populists (Mainwaring et al. Reference Mainwaring, María Bejarano and Pizarro Leongómez2006; Roberts Reference Roberts1995; Weyland Reference Weyland1996), undermining programmatic representation (Kurtz Reference Kurtz2004; Roberts Reference Roberts2002), and perpetuating clientelistic linkages (Auyero Reference Auyero2001; Holland and Palmer-Rubin Reference Holland and Palmer-Rubin2015). Fourth, a broader revitalization of interest in law enforcement and legal norms took root as crime rates rose across the region (Brinks Reference Brinks2007; Lessing and Denyer Willis Reference Lessing and Denyer Willis2019; Moncada Reference Moncada2016). Soaring crime and violence posed new questions about the connections between informal and illicit economies (Bergman Reference Bergman2018; Dewey Reference Dewey2012; Moncada Reference Moncada2016; Yashar Reference Yashar2019). Political scientists thus switched from analyzing informality as a dependent variable to thinking about how informality influenced a range of political outcomes—social policy, elections, organizing, enforcement and regulatory policy, and most recently, public health (Blofield et al. Reference Blofield, Pribble and Giambruno2021; Hummel Reference Hummel2021; Moncada Reference Moncada2021).
Despite the broadening scope of inquiry, most studies continue to struggle with the basic issue of how to define and measure informality. Most scholarship assumes a sharp distinction between formal-informal workers or insiders-outsiders. Yet in so doing, we argue, studies capture only some of the political consequences of informality and the changing nature of labor markets themselves.
This introduction provides a roadmap to understanding the political consequences of informality in Latin America by proposing that researchers envision an index of informalities. We emphasize the variation in relationships to laws and benefits in the wake of social policy reforms, labor market changes, and political linkages. Thinking of informality along a spectrum—or at least in terms of a typology— suggests that what it means to “be informal” is often highly contextual. We suggest a different approach to measurement based on a checklist of legal and benefit relationships that could then be compiled into an index to classify individuals as less to more formal.
One implication is that the impacts of informality on politics may be over-stated. While being outside of a law or benefit may change behavior toward that law or benefit, it may not impact broader political behaviors, such as voting, protest, or policy attitudes (Baker and Velasco Guachalla 2018; Baker and Dorr this issue). There is a need to think about the ways that an individual’s life may be outside of a subset of laws, regulations, or property regulations while being inside of others. Doing so allows political scientists to analyze an individual’s choice of which laws and benefits they want to access, as well as the state’s decisions about which behaviors it wants to enforce and make legible (see Rosaldo this issue and Toledo Orozco this issue for discussions of state enforcement and legibility).
In the following sections, we review some of the new questions about political linkages and organizing, social policy, and enforcement toward informal activities, situating the contributions of this special issue. We then present an index definition of informality and consider what it might mean for these research agendas. We review the contributions of this special issue and how they shed light on the range of informalities highlighted, and we consider how thinking about informalities in the plural suggests new research questions regarding the strategies that individuals and states pursue.
THE POLITICAL IMPACTS OF INFORMALITY
The dual transition that brought both democracy and open economies to Latin America revived interest in informality. Political scientists have become attuned to how informality affects an array of political activities. Each body of work tends to define informality with respect to its dependent variable of interest.
Elections and Political Behavior
One of the classic questions about the informal sector is whether workers vote, participate, or organize differently than counterparts in the formal sector—a question that Baker and Dorr take on in this issue with the first meta-analyses of informal workers’ vote choices. In the 1960s, a popular concern was that informal sector workers were more leftist and revolutionary than unionized workers, given their poverty and lack of integration into social structures. Important studies showed that, if anything, informal workers were marginalized, captured by clientelistic patrons, and less likely to participate in politics or protest (Nelson Reference Nelson1970; Perlman Reference Perlman1976). By the 1980s, the pendulum had swung in the opposite direction, with scholars seeing informal workers as more conservative and unaware of their class position, even constituting a base for an antiregulation neoliberal right or populist movements (Roberts Reference Roberts2002; De Soto and Ghersi 1989).
Survey data have provided new insight into these questions but also have required a sweeping definition of informality. In particular, Baker and Velasco Guachalla (2018) and Baker and Dorr (this issue) look at whether informal sector workers vote, campaign, protest, or join political parties and civic organizations differently than those in the formal sector. The authors find that they do not, at statistically significant rates, in most places. In studying such a broad range of political behaviors, informal sector workers are similarly defined in a general way, as salaried or self-employed workers who are not enrolled in social security (Baker and Velasco Guachalla 2018, 173). Collier and Handlin (Reference Collier and Handlin2009) conceptualize a new, looser set of associational linkages, distinct from the traditional union-party hub, that still can integrate informal workers into politics. Yet again, informality is defined in very broad terms as part of the popular sector.
Other studies have focused in on specific types of informal workers and have revealed a rich array of political activities (see Hummel this issue; Rosaldo this issue; Toledo Orozco this issue). The dominant view in the 1990s was that the informal sector was uniformly fragmented, apolitical, and disorganized. However, new studies have revealed surprising levels—and variation—in the extent of informal organizing (Agarwala Reference Agarwala2013; Blofield Reference Blofield2012; Cross Reference Cross1998; Fernández-Kelly and Shefner Reference Fernández-Kelly and Shefner2006). For instance, Hummel (Reference Hummel2017, Reference Hummel2021) shows how Bolivian officials encourage street vendors to organize as a way to increase compliance, and workers, in turn, organize to access state licenses and benefits. In Mexico, the PRI also deliberately organized street vendors (Cross Reference Cross1998), and under democracy, parties routinely turn to organizational brokers in the informal sector to mobilize voters to the polls (Holland and Palmer-Rubin Reference Holland and Palmer-Rubin2015).
Many studies of informal organizing and electoral mobilization focus on specific types of informality, such as street vendors who violate public space regulations (Hummel this issue) or informal miners who lack operating licenses (Toledo Orozco this issue). While this special issue concentrates on labor informality, a parallel literature also has developed on how residential informality—neighborhoods that lack property titles or legalizations—leads to political organization and demands for local public goods (Auerbach Reference Auerbach2019; Dosh Reference Dosh2010; Fischer Reference Fischer2008; Gay Reference Gay1994). It often is unclear how these types of informality aggregate into political behaviors, and there may be differences across informal activities. For instance, Thachil (Reference Thachil2020) finds that repressive state intervention has divergent political effects across informal activities: it encourages cooperation and protest at unlicensed worksites but not in untitled neighborhoods.
Important questions remain about the ways that state behaviors and electoral institutions condition the political participation of the informal sector. For instance, when states extort informal workers, Grossman (Reference Grossman2019) finds that informal traders in Nigeria form associations to protect their interests against the state. But Hummel (Reference Hummel2018a, b) finds that state extortion leads market organizations to collude with the state in Bolivia and Brazil. Other studies focus on how electoral conditions shape the political incorporation of informal workers. For instance, Holland (Reference Holland2015) finds that the structure of electoral rules, such as the decentralization of elections, can affect the electoral leverage of informal workers. Feierherd (Reference Feierherd2021) shows how left parties face acute pressure to relax regulations on their electoral constituents. How states spur organization and electoral conditions spur informal sector participation remains an important area for research.
Social Policy
A parallel body of scholarship has developed on how labor informality shapes social policy provision, and with the global pandemic, also public health. Central questions include: When do politicians extend social programs to include workers without traditional labor contracts (Blofield et al. Reference Blofield, Giambruno and Filgueira2020; Garay Reference Garay2016)? How does informality condition social policy preferences (Altamirano et al. this issue; Carnes and Mares Reference Carnes and Mares2014; Rueda Reference Rueda2007)? What feedback cycles result from social policy and labor exclusion (Berens Reference Berens2020)?
Historically, Latin American states provided contributory social policy, such as health care and pensions, which depended on an individual’s employment contract. These “truncated” welfare states excluded those without stable, formal sector employment. With the return of democracy, however, many governments layered noncontributory social policies onto their contributory systems (Holland and Schneider 2017; Hunter and Sugiyama 2009). The COVID-19 pandemic accelerated the growth of noncontributory social assistance and universal healthcare across Latin America (Filgueira et al. Reference Filgueira, Miguel Galindo, Giambruno and Blofield2020), with many Latin American governments specifically targeting informal workers outside traditional labor, social security, and healthcare structures (Blofield et al. Reference Blofield, Giambruno and Filgueira2020; Hummel et al. Reference Hummel, Michael Touchton, Velasco Guachalla, Nelson-Nuñez and Boulding2021).
Implicit in studies of policy choice is the idea that informal sector workers hold distinct welfare preferences. For instance, they should prefer noncontributory programs that extend to those without stable labor relationships. A substantial literature examines whether this holds (Altamirano Reference Altamirano2015; Berens Reference Berens2015; Carnes and Mares Reference Carnes and Mares2014, Reference Carnes and Mares2015; Menéndez 2019; Rueda Reference Rueda2005, Reference Rueda2007). While some work finds that labor market outsiders do differ in their social policy demands (Berens Reference Berens2015; Rueda Reference Rueda2005, Reference Rueda2007), other studies find few differences (Altamirano et al. this issue).
Yet the challenge of operationalizing informality makes it difficult to know what to conclude from studies of social policy preferences and inclusion. Most studies of social policy operationalize informality based on the benefits that workers can access. For instance, Garay (Reference Garay2016, 339) operationalizes “outsiders” as those who lack access to social security systems and provides a persuasive account of how the extent of electoral competition for their votes explains social policy extensions. Yet access to benefits generally is measured for individuals, rather than at the household level, where individuals can be covered under a partner’s benefits (see Altamirano et al. this issue; Perry Reference Perry2007). The growth of atypical labor contracts, such as “gig” work and subcontracting (Holland this issue), means that many “formal” workers with labor contracts have limited benefit access. Additionally, benefit access is captured at a single moment in time, rather than over a worker’s lifespan, in which they may move in and out of jobs with benefit access (Carnes and Mares Reference Carnes and Mares2014, 15; Schneider and Karcher Reference Schneider and Karcher2010).
Alternatively, some work suggests that social policy—and more specifically, truncated or low-quality benefits—leads some individuals to prefer to work in the informal sector without benefits (Berens Reference Berens2020). Demands for forbearance toward informal activities also can serve as an informal welfare policy, which crowds out demands for formal social policies to achieve parallel ends (Holland Reference Holland2017). It is unclear whether the weak or null findings on differences in informal sector behavior result from the fluidity and linkages between the informal and formal sector with respect to benefit access, or from convergent preferences that may result from low-quality welfare states.
Enforcement and Illegality
A third body of work looks at the politics of enforcement and regulation and how enforcement itself can shape electoral choices. How do states with some, but limited, resources enforce their regulations (Amengual Reference Amengual2015; Holland Reference Holland2017; Hummel Reference Hummel2017)? How do governments manipulate enforcement for electoral or social ends (Feierherd Reference Feierherd2021; Holland Reference Holland2017)? Do informal workers have distinct preferences for enforcement and regulation? Does the exclusion from one benefit create incentives to engage in crime or evade taxes (Hummel Reference Hummel2018b, a; Pinheiro-Machado Reference Pinheiro-Machado2011)?
Informality often has been seen as the result of weak states that are unable to enforce their own laws and regulations or provide workers with sufficient employment options. But research increasingly shows how governments alter the level of enforcement, and in so doing, may change the ways that informal sector workers organize and mobilize politically. Hummel (this issue) finds that leaders of informal workers’ organizations strategically use destructive protest to extract agreements and benefits from local officials. Officials choose to respond with law enforcement or lucrative deals, depending on their political resources. Similarly, Toledo Orozco (this issue) finds that when the central government attempts to crack down on unlicensed miners, miners organize to take over local governments and rewrite mining laws from within the state. States also require the participation of societal groups like unions to “coproduce” enforcement outcomes (Amengual Reference Amengual2015; Amengual and Dargent Reference Amengual, Dargent, Daniel and Levitsky2020; Amengual and Fine Reference Amengual and Fine2017; Auerbach et al. 2018; Hummel Reference Hummel2017, Reference Hummel2021).
A key point in this literature is that states have choices about whether and how to enforce laws (see Hummel this issue; Rosaldo this issue; Toledo Orozco this issue). Holland (Reference Holland2015, Reference Holland2017) argues that politicians deliberately choose not to enforce laws, or forbearance, to court informal sector voters in informal markets and neighborhoods. Feierherd (Reference Feierherd2021) shows that left-wing parties are more likely to slow down enforcement and improve conditions in the informal sector than right-wing ones. Similar political manipulations of enforcement can be found against informal street vendors across African cities (Resnick Reference Resnick2019), as well as informal transit providers (Goodfellow Reference Goodfellow2012).
Parallel work exists on political choices about the enforcement of labor regulations. Officials rarely inspect the millions of workplaces in their jurisdictions or thoroughly enforce the thousands of labor regulations in their purview (Amengual and Fine Reference Amengual and Fine2017; Dewey Reference Dewey2020; Ronconi Reference Ronconi2010). Post et al. (Reference Post, Bronsoler and Salman2017), Hummel (Reference Hummel2017), Grossman (Reference Grossman2019), and others find that officials coproduce compliance at informal worksites and choose to focus on compliance with some regulations, like licensing and public health statutes, over others, like tax compliance.
An interesting new strain of literature also thinks about the intersection between informality and illegality. On the one hand, rising crime rates can become a justification for crackdowns on informal workers and activities (Ngonyama Reference Ngonyama2010; Pinheiro-Machado Reference Pinheiro-Machado2011). On the other hand, informality itself might thrive and intersect with criminal organizations (Bergman Reference Bergman2018; Moncada Reference Moncada2016; Yashar Reference Yashar2019). Dewey (Reference Dewey2012) finds that state actors can profit from and encourage informality, as in the case of Argentine police working with informal and illicit networks that sell stolen vehicles. Itikawa (Reference Itikawa2006) and Hummel (Reference Hummel2018a) find that informal characteristics make workers more vulnerable to violence and extortion.
Many open questions remain about the difference in enforcement politics across developing and advanced economies. As gig work has spread in advanced economies, it becomes even more apparent that governments choose both how to regulate and how to enforce against nonstandard work contracts. As Holland (this issue) notes, states increasingly use subcontracting and other nonstandard work contracts, in some cases becoming employers of large semiformal or informal workforces. Research has begun to examine whether gig workers hold distinct social policy preferences and how the new “precariat” will shape traditional party politics (Thelen Reference Thelen2019). Likewise, as migration has increased within Latin America, informal work is intersecting with issues of legal citizenship status in ways more familiar to advanced economies. For example, in the United States and France, people without legal residency make up a sizable portion of informal workers because they do not have access to the large formal labor market. Historically, most informal workers in Latin America have worked in their country of origin, but as more people migrate, more countries have erected legal barriers to residency and many migrants cannot find or access formal work. Whether crackdowns on informal economic activity become a way to control migration is yet another open question.
In short, the growing literature on labor informality takes informal work as an explanation for political behavior, as well as an outcome shaped by politics. Researchers have established that who is and is not informal depends on political choices (Dewey Reference Dewey2020; Garay Reference Garay2016; Hunter and Brill Reference Hunter and Brill2016); that politicians try to mobilize informal votes and in the process reshape what it means to be informal (Auerbach and Thachil Reference Auerbach and Thachil2018; Holland Reference Holland2017); and that informal workers organize and engage with their governments (Agarwala Reference Agarwala2013; Grossman Reference Grossman2019; Hummel Reference Hummel2017). Old fears that the decline of unions would result in unorganized masses of informal laborers (Portes et al. 1989; Roberts Reference Roberts2002) and the radicalization of the informal sector (King and Rueda Reference King and Rueda2008) were unfounded. But many important questions remain about the conditions under which informality does or does not matter in national politics (see Baker and Dorr this issue; Toledo Orozco this issue). On a more fundamental level, the literature has not settled on a definition or standard measurement of informality. The measures used often depend on the questions asked, as well as the serious challenges of comparing informal activities across time and setting.
AN INDEX APPROACH TO INFORMALITIES
Informality always has posed challenges for conceptualization and measurement. Conceptually, informality sometimes is defined with respect to a particular law or benefit. As Castells and Portes state (1989, 12), informal activities are “all income-earning activities that are not regulated by the state in social environments where similar activities are regulated.” Yet scholars also want to speak of the effects of informality—often understood as a sector of society or an identity group—for broad political outcomes. What does it mean to “be informal” for the purposes of elections, organizing, or social policy? Given the fluidity of work arrangements, where up to half of informal workers move across the boundaries of formal and informal work every year (Baker and Velasco Guachalla 2018, 172), does it make sense to think of momentary belonging or an entire work history to classify workers?
An assumption often made in work on the informal sector is that different dimensions of informality overlap and therefore can substitute for each other. The lack of a labor contract, for instance, can exclude workers from contributory social policies. It therefore does not matter if informality is measured as the lack of a labor contract or of a pension or health care. Perry (Reference Perry2007) goes farthest to disaggregate informality into a legalistic definition, which focuses on compliance with labor law (e.g., the existence of a written contract among workers or the registration of firms with the relevant tax authorities), and the benefits definition, which focuses on the extent of social security coverage. These definitions overlap, but imperfectly.
Other researchers assume that any type of informality makes an individual part of the informal sector. For instance, the International Labor Organization (ILO) defines workers as informal “if their employment relationship is not subject to standard labor legislation, taxation, social protection, or entitlement to certain employment benefits” (2018, emphasis added). This definition combines the legalistic and benefits definitions. Such an encompassing definition makes sense if any type of informality generates distinct preferences and political behaviors but also captures large and heterogeneous populations.
Figure 1 compares common operationalizations of informality and makes clear the imperfect overlap across measures. The ILO (2018), for instance, finds that two billion workers around the world fall under this definition, with 183 million workers, or 40 percent of the economically active population in Latin America, in this category. Another common measure for informal work is self-employment (Hummel Reference Hummel2021). Depending on the data source and year, 36 percent (World Bank 2019) to 47 percent (AmericasBarometer 2019) of Latin American workers are self-employed at a given time. LAPOP surveys ask different questions about access to retirement benefits that researchers can use to operationalize a form of benefit informality: in 2006, 2008, and 2018, just over half of Latin American workers did not pay into a retirement program at work (although some may have received coverage through a spouse or noncontributory program).
Figure 1. Informal Workers as Percentage of the Economically Active Population, Measured Three Different Ways
The operationalizations of informality in figure 1 overlap less than many researchers assume. In the ILO’s calculations, 75 percent of informal workers in Latin America are also self-employed, meaning that researchers using self-employment as a proxy for informality ignore 25 percent of the potentially relevant individuals. Those workers may systematically differ from the included workers. For instance, in political terms, self-employed workers may be closer to a petite bourgeoisie in favoring limited regulations on business and benefit requirements (De Soto and Ghersi 1989). In the LAPOP data, the percentages of self-employed workers and workers without retirement benefits are similar at the national level. At the individual level, however, 30 percent of people without retirement contributions are employees and would be left out of a self-employment operationalization of informality. Likewise, 17 percent of self-employed people in the 2018 LAPOP survey wave make retirement contributions and thus do not fit a benefits definition of informality.
Two trends also may be pushing the legal and benefit operationalizations farther apart. First, as governments extend noncontributory social policies, many workers without formal labor arrangements have access to social programs. We might think of these as socially included but legally excluded workers.Footnote 1 Second, with the growth of precarious contract types, some workers have formal legal contracts that do not include social benefits. So a worker might be a subcontractor for a large firm but not have access to that firm’s pension or health policy (and might be too well off to qualify for means-tested noncontributory pension or health programs, even if these were on offer from the government. In other words, a worker may be legally included but socially excluded. This typically describes workers in the gig economy around the world, and is discussed by Holland (this issue). Table 1 maps these two dimensions on which workers may be included or excluded from existing laws and policies.
Table 1. Disaggregating Benefit and Labor Informalities
Furthermore, formality with respect to a single law or regulation does not imply formality with respect to other regulations or over time. Take the example of a street vendor who has a license from the city government to work in the street and pays local taxes and fees to maintain that license. This vendor is in legal compliance with respect to the workplace and the city government. However, this vendor may not pay income taxes or enroll in social security, which puts the vendor out of compliance with national regulations. Perhaps one week a friend tells this worker about a temporary job opening in a factory for the holiday season. The worker might sign a job contract for three months but not gain access to pension or health benefits more permanently.
This scenario is common. For instance, Baker and Velasco Guachalla (2018, 172), find that formal workers in Brazil, Mexico, and Argentina have a roughly 10 percent likelihood of taking an informal job in a given year, whereas informal workers have a 20 to 45 percent chance of taking a formal sector job in a given year.
Given these differences, we propose thinking of economic life as a set of relationships needed to fully comply with state regulations. These include everything from business to tax, labor, social welfare, and environmental regulations. A worker can have no relationships or documents linking them to the state, or a collection of tax returns, licenses, fee receipts, identification cards, certificates, stamped and witnessed letters, signed contracts, and forms tracing their relationships with state actors and institutions over decades (Hunter and Brill Reference Hunter and Brill2016). We could think of these relationships as generating a typology of informal work, in which workers hold different benefit and legal relationships with the state, as table 1 implies. Or we propose thinking of an index of informality, where researchers can look at a single definition of informality or aggregate several dimensions into a large set of relationships that identify individuals as more or less formal. The index conceptualization builds on the suggestion of Elinor Ostrom and others to think of informality as a continuum (Guha-Khasnobis et al. Reference Guha-Khasnobis, Kanbur and Ostrom2007; ILO 2018).
Forms of informalities can be aggregated into an index of economic regulations. Individuals can comply with none or all of the laws that regulate their lives, making them more or less informal. Governments also will differ in the relationships that they require of their citizens and against which they compare their citizens. Governments that intervene more in economic life create more possibilities for informality. Whether intervention leads to informality or not depends on how governments enforce their laws and how citizens comply with state regulations. For instance, cities often have higher levels of informality than rural areas simply because the density and proximity of residents require governments to intervene in a broader set of issues. Rural life may have less informality because governments do less to regulate it; for example, in many countries, agricultural work is governed by fewer or more permissive laws than other types of work. For this reason, it also makes little sense to speak of limited informality in states that are too weak or detached to regulate economic activities.
There are two main reasons that thinking of “informalities,” or an index of informality, matters. First, an index helps to understand which laws and benefits an individual can and wants to access. Individuals often prefer combinations that surprise researchers. For instance, many squatters violate property laws but pay taxes because they want the state to “see” their occupation. Street vendors who lack licenses to sell in the street sometimes pay taxes or market fees to access basic goods like trash removal and electricity (Martin Reference Martin2014) or follow local sanitation regulations to attract customers while ignoring the national tax authority. Large landowners in Colombia register their properties to have recourse to courts for legal disputes, but not for tax authorities that would come to collect bills (Sánchez-Talanquer Reference Sánchez-Talanquer2020).
States also may dedicate divergent efforts to enforcing different laws and regulations on the books, particularly when facing budget constraints and varying social pressures. Toledo Orozco (this issue), for instance, documents how informal miners enter politics to rewrite mining laws instead of pressuring the state not to enforce existing ones. Recognizing informalities opens research questions about what individuals want the state to see and what the state chooses to make legible.
Second, an informalities approach considers why participation in the informal sector may not matter. Many scholars treat informality as an identity or social class and then ask whether it matters politically. Informality often becomes shorthand for poverty or the “popular sector.” While there is a large literature on why groups cohere along class lines, it is not clear that the informal sector is a coherent identity, given the heterogeneity in benefit and legal status within the sector itself. Thinking about informalities in the plural makes clear why class and enforcement preferences—and by extension, perhaps political behavior—may diverge.
Let’s go back to our street vendor. Given precarious income levels, self-employment, and no national income tax payments, many scholars would label this person “informal,” even though the vendor complies with local laws. Yet if we consider a corporate executive who registers a business, pays salaries on the books, and yet hides much of the wealth in shell companies, we still think of that person as part of the formal economy. The street vendor and the corporate executive, however, might share the same opposition to a left-wing political candidate who proposes to crack down on tax violations. A class division results in the same enforcement preferences and potential political preferences, depending on how tax evasion becomes politicized.
Conversely, the same class groups can hold divergent enforcement preferences. For instance, small businesses or market vendors often see street vendors who do not pay for physical shops or stalls as undercutting their business. They want additional law enforcement against street vendors, even while vendors might prefer forbearance. Both groups get lumped into the informal sector and even might be thought to share a class identity, yet their views about law enforcement, policing, and a conservative politician who proposes to “clean up the streets” could diverge.
An index can be disaggregated to ask how an individual relates to a particular law or regulation. We expect political behavior to be most clearly predicted by informal status with respect to that law or regulation. To think about informality’s effect on broader political behaviors, the idea would be to aggregate inclusion and exclusion with respect to a broad set of benefits. It would then be an open question whether this continuum of informality predicts behaviors like voting, party membership, and so on.
Even if there is agreement that informality involves a set of relationships, measurement poses a challenge. Few data sources include questions on the categories of relationships—work, social policy, tax, and labor contract inclusion—that ideally would be used to classify individuals on an index. They also usually capture a snapshot in time, rather than an individual’s labor or benefit history.
The efforts of some surveys to capture types of informality present an exciting path forward. The Latin American Public Opinion Project and the Comparative Study of Electoral Systems have asked questions about employment—the LAPOP core questionnaire asks whether an individual is self-employed or works without pay and has been used as a proxy for informality. Some waves include questions about benefit access, generally whether an individual has health or pension coverage, which have been used to operationalize informality (e.g., Altamirano Reference Altamirano2015; Baker and Velasco Guachalla 2018; Berens Reference Berens2015). The 2018 LAPOP wave added a ten-category employment sector question and a question on welfare informality, which asks whether an individual or their employer makes pension or retirement contributions. Many CSES surveys ask detailed employment questions about occupation, wage, and self-employment that scholars could use to operationalize informality. However, these questions do not capture informal workers in larger firms and do not always specify whether individuals receive welfare benefits through their work. National surveys can provide even more precise operationalizations. For instance, Altamirano et al. (this issue) take a step toward an index approach to benefit compliance through a survey and conjoint experiment in Mexico that asked respondents if they had a written contract and were part of three social assistance programs.
With greater flexibility to design survey questions, the ideal approach to measuring informality would ask a battery of questions about laws and regulations, much like what is done to measure household wealth through ownership of household goods. One would want to know whether an individual complies with labor, health, tax, and pension laws and regulations. The items then could be combined in a principal component analysis to think about the degree of informality on a single scale or in a small number of dimensions. It is possible that certain types of informality, such as legal or benefit, would cluster together, suggesting a typological approach.
Empirically, it is an open question whether the degree of informality predicts political behavior. We expect that there is a much tighter connection between an individual’s stake in a given law or policy and their preference on that particular issue, as Altamirano et al. (this issue) find in Mexico. It is less clear whether informality generalizes to preferences over a range of laws and policy areas, but it would be an important question to explore through an index approach.
OVERVIEW OF THE ISSUE
The articles in this issue highlight the range of informalities present across Latin America, as well as many unexpected outcomes that result from informal organizing. Several articles highlight the fluid boundary between formal and informal work, demonstrating that workers move in and out of jobs and frequently change their relationships with laws and the state. Other articles highlight the unintended consequences of informality, and in particular, the creative ways that workers resist or undermine state control and enforcement.
Andy Baker and Dalton Dorr begin the issue by examining informal workers’ policy preferences and political behavior. They undertake the first meta-analysis of published studies on these topics. Across studies, Baker and Dorr find that there are small, systematic differences between formal and informal workers in Latin America. Baker and Dorr’s work reinforces the idea that the borders of formality and informality are fluid, and that informality may not predict broad political engagement.
Zaraí Toledo Orozco’s in-depth qualitative work with artisanal miners in Peru and Bolivia shows how informal workers do hold strong preferences about specific laws and regulations. She shows that informal miners can pressure the state to change laws and can acquire substantial political power, especially in states with uneven territorial reach. In Peru and Bolivia, informal miners organized into powerful groups and leveraged state fragmentation to pursue their interests. When national governments attempted to crack down on informal mining, the groups gained local political allies, initially to secure forbearance. They then won local elections and used political offices to negotiate with national bureaucrats and rewrite mining regulations.
Manuel Rosaldo examines how informal workers can be more complex than commonly assumed. He shows how informal workers can undercut state attempts to formalize them. More specifically, he asks why an ambitious recycling reform in São Paulo, Brazil incorporated only 1 percent of the city’s waste pickers. Based on ethnographic fieldwork, Rosaldo found that recycling reforms supported cooperatives that did not address the needs of existing waste pickers and instead hired other citizens into recycling jobs. While city officials view waste picking as precarious work to be reformed and improved, waste pickers view their work as a resource and source of self-worth that state formalization does not or cannot improve.
Calla Hummel (Xy) delves into contentious behavior in informal markets and the informal sector’s sources of political power. Xy asks why leaders of street vending unions in Bolivia, who regularly work with city officials on many issues, publicly target those officials in destructive and violent protests in Bolivia. Xy argues that leaders of informal organizations resort to destructive tactics to pressure local officials and extract lucrative informal agreements from them. Hummel uses ethnographic and newspaper data to process-trace competing strategies through two cases of destructive protest and one case of peaceful negotiation between a street vendor union and the municipal government of El Alto.
Returning to the theme of informalities, Alisha Holland examines the spread of flexible work contracts, in which workers have legal documents but lack access to key welfare benefits and organizing rights. She shows how the growth of flexible work has led to unexpected labor mobilizations in Chile and Peru. While other scholars have argued that flexible labor damages unions and pits insiders against outsiders, Holland finds that unions try to forge coalitions with temporary and precarious workers because they see their own membership threatened by flexibility reforms.
Melina Altamirano, Sarah Berens, and Franziska Deeg’s study of social policy preferences in Mexico closes the issue with a counterintuitive finding: informal workers support social assistance policy at lower rates than formal workers. Using an original survey and conjoint experiment of 1,400 people in Puebla and Querétaro, the authors find that insecure formal workers have preferences that resemble those of informal workers, highlighting the continuity between sectors. Insecure workers, whether formal or informal, appear to have low levels of support for social assistance programs because they do not trust the state to deliver goods and services.
The articles in this issue illustrate the fluid boundaries between informal and formal workers but also how different types of informal workers care about different policy areas and use divergent strategies to influence politics. The variety of experiences leads to outcomes that appear surprising to standard political science approaches, such as artisan miners taking over city offices and rewriting mining policy, or street-vending union leaders burning down city buildings to get information on law enforcement. Combined, the articles point to the difficulties of theorizing a cohesive political identity or class around informal work in the Americas. Informal workers do not use uniform organizing tactics (Hummel, Toledo Orozco, Rosaldo this issue), do not have shared political preferences or behavior (Baker and Dorr this issue), and sometimes share interests and mobilizing tactics with the formal sector workers they are thought to oppose (Altamirano et al. this issue; Holland this issue). Informal workers do not behave as a distinct group because of the heterogeneity and fluidity of informal work and the fact that experiences with local and national governments depend on the particular law or benefits at stake.
A RESEARCH AGENDA ON INFORMALITIES
What is informal work, and when is it politically relevant? The answers to these questions come with significant stakes for workers, politicians, policymakers, researchers, and entrepreneurs. These questions impact who can make a living from their work, who gets loans, who can retire, who has access to government programs, and who can access their political representatives. This special issue addresses these ongoing debates and points to several unresolved questions for future research.
People do not behave uniformly as informal or formal workers because the boundary between those categories is porous and artificial. Most people in the Americas will work in both formal and informal jobs over the course of their careers (Baker and Velasco Guachalla 2018; ILO 2018), and what constitutes formal work can be recast as informal, depending on the analyst’s definition (Perry Reference Perry2007). Holland (this issue) and Altamirano et al. (this issue) demonstrate how the boundaries between informal and formal work often break down and result in convergent preferences and interests across what often are thought of as conflicting sectors.
We suggest that an informalities approach captures the complex array of incentives and constraints that individuals contend with in different jobs and countries. An informalities approach takes labor informality as an index of relationships to the state. People want different policies and make different political choices depending on their constellation of relationships to their government. Researchers may choose to focus on a particular aspect of the index relevant to the policy area at hand. But it remains an open question as to whether the degree of informality over time and areas is associated with different political behaviors.
Qualitative work can map informalities by asking workers about their work history and interactions with the state, while survey research has started to make the informalities approach possible in quantitative work by asking workers about their occupation, employment status, social security benefits, participation, tax compliance, and more (CSES 2018; ILO 2018; AmericasBarometer 2019). We encourage this trend. Altamirano et al. employ an index approach to identify informal workers in their survey. Toledo Orozco, Rosaldo, and Hummel use ethnography to establish how informalities shape counterintuitive political engagement and disengagement.
The work in this issue employs a diverse range of methods and builds on work that spans continents, perspectives, and theoretical and methodological traditions. It also points to the gaps and opportunities in this literature: despite the focus on causal inference in quantitative social science, few studies on informality use causal inference or experimental research designs. The notable exceptions (Auerbach and Thachil Reference Auerbach and Thachil2018; Feierherd Reference Feierherd2021; Holland Reference Holland2015, Reference Holland2017; Thachil Reference Thachil2020) have drawn considerable attention. With the accumulation of hypotheses in this literature, greater attention to theory testing and causal inference could help to advance ongoing debates.
Likewise, few studies use administrative data. In the past, administrative data on informalities did not exist, but with the rise of policies that explicitly target labor informality, this may be changing. Gaining access to these data or working with governments to improve the ways they collect data on informalities could help advance research.
Finally, our index approach requires understanding which laws and benefits are relevant to citizens’ economic lives. Pairing ethnographic work with better survey, experimental, or observational data can develop questions that capture an array of ways in which citizens choose to be seen by the state, and those in which they are forced or choose to remain in the shadows.
