Abstract
This paper responds to recent arguments that the informal sector is an extremely fuzzy concept and that the formal/informal dichotomy does not serve as a useful description of welfare or income. A taxonomic system is proposed that is intended to supplement but not replace the long-accepted formal/informal system. By focusing on labor force units rather than firms, the proposed system provides an analytical category that is equivalent to the urban working poor and thus has significant advantages for the study of such topics as income distribution, rural-urban migration, and poverty.
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