WP09/2010

Defining and measuring informal employment in South Africa: A review of recent approaches

Stellenbosch Working Paper Series No. WP09/2010

Author(s): Derek Yu

JEL Classification: J00

Keywords: South Africa, Household survey, Labour market trends, Informal employment

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Abstract:

This paper reviews the Stats SA methodologies to measure informal employment before and after the introduction of the Quarterly Labour Force Survey (QLFS), as well as other recently proposed approaches (e.g., Devey, Skinner and Valodia, Heintz and Posel, etc.), so as to investigate the congruence, if any, between the various measures of the rate of informality. Furthermore, econometric techniques are used to investigate commonalities and differences in the way in which the different measures of informality are associated with demographic and employment characteristics. The results suggest that informal employment is much bigger if the post-2007 Stats SA methodology, which considers employment as informal regardless of whether the activities take place in the informal sector or not, is adopted.