Urbanization, Gender, and Business Creation in the Informal Sector in India

This Economic Premise examines the intersection of four important development themes: urbanization, agglomeration, gender, and informality. Although urbanization has continued at a rapid pace, formalization appears to have stalled. Women comprise an increasing share of the informal sector in many countries, but are increasingly underrepresented in the formal sector relative to their presence in the informal sector. Firm-level evidence suggests informal enterprise creation, particularly by women, has important connections to urbanization. Female-specific market access, especially to inputs, is a key factor for women-owned enterprise creation in the informal sector. Given the persistence of the informal sector, and given the importance of women-owned enterprise creation for jobs and gender equity, more policy measures focused on enhancing access to inputs for female-owned enterprises are important to maximize women’s contributions to India’s economic growth.