Incorporating understanding of informal economic activity in natural resource and economic development policy.

Abstract

This report synthesizes the literature on the role of informal economic activity in the United States postindustrial economy. Informal economic activity is expanding in the United States and is likely to continue in the foreseeable future. The formal and informal economic sectors are inextricably intertwined, with individuals and households combining elements of both sectors to construct their livelihoods. Although the informal economy is often thought of as the domain of economically marginal individuals and households, virtually everyone participates in the informal economy to some extent. However, the literature highlights how factors such as social status and household position in the formal economy affect whether participation in informal economic activity is exploitative or empowering. The nontimber forest products sector serves as a case study of why it is important to consider informal economic activity when developing natural resource and economic development policy. We recommend steps policymakers can take to identify and encourage positive aspects of the informal economic activity. We also highlight several areas of research to improve understandings of the role of informal economic activity in postindustrial societies.