Beyond the marginalisation thesis: evaluating participation in informal sector entrepreneurship

Abstract

This paper evaluates which entrepreneurs participate in the informal sector. Until now, the dominant view has been that entrepreneurs from marginalised groups benefiting least from the formal sector are more likely to do so. To evaluate this marginalisation thesis, we report a 2013 survey of 11 central and east European countries involving 707 face-to-face interviews with entrepreneurs about their participation in the informal sector. Using logistic regression analysis, the finding is that the marginalisation thesis applies when examining characteristics such as the household financial circumstances and age of entrepreneurs engaged in the informal sector. However, when gender variations are analysed, the thesis is negatively confirmed. Meanwhile, no association is found when analysing characteristics such as the educational level, social class and area inhabited. The outcome is a call to move beyond the marginalisation thesis and towards a more nuanced understanding of which entrepreneurs participate in the informal sector.