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The size, origins, and character of Mongolia's informal sector during the transition

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  • Anderson,James

Abstract

The explosion of informal entrepreneurial activity during Mongolia's transition to a market economy represents one of the most visible signs of change in this expansive but sparsely populated Asian country. To deepen our understanding of Mongolia's informal sector during the transition, the author merges anecdotal experience from qualitative interviews with hard data from a survey of 770 informals in Ulaanbaatar, from a national household survey, and from official employment statistics. Using varied sources, the author generates rudimentary estimates of the magnitude of, and trends in, informal activity in Mongolia, estimates that are surprisingly consistent with each other. He evaluates four types of reasons for the burst of informal activity in Mongolia since 1990: 1) The crisis of the early and mid-1990s, during which large pools of labor were released from formal employment. 2) Rural to urban migration. 3) The"market's"reallocation of resources toward areas neglected under the old system: services such as distribution and transportation. 4) The institutional environments faced by the formal and informal sectors: hindering growth of the formal sector, facilitating entry for the informal sector. Formal labor markets haven't absorbed the labor made available by the crisis and by migration and haven't fully responded to the demand for new services. The relative ease of entering the informal market explains that market's great expansion. The relative difficulty of entering formal markets is not random but is driven by policy. Improving policies in the formal sector could afford the same ease of entry there as is currently being experienced in the informal sector.

Suggested Citation

  • Anderson,James, 1998. "The size, origins, and character of Mongolia's informal sector during the transition," Policy Research Working Paper Series 1916, The World Bank.
    • Handle: RePEc:wbk:wbrwps:1916
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    Citations

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    Cited by:

    1. Ishengoma, Esther K. & Kappel, Robert, 2006. "Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?," GIGA Working Papers 20, GIGA German Institute of Global and Area Studies.
    2. Sabine Bernabe, 2002. "Informal Employment in Countries in Transition: A conceptual framework," CASE Papers case56, Centre for Analysis of Social Exclusion, LSE.
    3. Bernabè, Sabine. & Singh, Andréa Menefee,, 2002. "A profile of informal employment : the case of Georgia," ILO Working Papers 993551923402676, International Labour Organization.
    4. Antonio G. Chessa & Marije C. Schouwstra, 2005. "Total Factor Productivity and the Mongolian Transition," Tinbergen Institute Discussion Papers 05-087/2, Tinbergen Institute.
    5. Amin, A. T. M. Nurul & Singh, Andréa Menefee,, 2002. "The informal sector in Asia from the decent work perspective," ILO Working Papers 993551963402676, International Labour Organization.
    6. Klarita Gërxhani, 2007. "“Did You Pay Your Taxes?” How (Not) to Conduct Tax Evasion Surveys in Transition Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 80(3), pages 555-581, February.
    7. Yuriy Timofeyev, 2013. "The Effects of the Informal Sector on Income of the Poor in Russia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(3), pages 855-866, May.
    8. Klarita Gërxhani, 2004. "The Informal Sector in Developed and Less Developed Countries: A Literature Survey," Public Choice, Springer, vol. 120(3_4), pages 267-300, September.
    9. repec:ilo:ilowps:355192 is not listed on IDEAS
    10. Nguyen, Duy Loi & Nguyen, Binh Giang & Tran, Thi Ha & Vo, Thi Minh Le & Nguyen, Dinh Ngan, 2014. "Employment, Earnings and Social Protection for Female Workers in Vietnam’s Informal Sector," MPRA Paper 61989, University Library of Munich, Germany.
    11. Fujin Zhou & Remco Oostendorp, 2014. "Measuring True Sales and Underreporting with Matched Firm-Level Survey and Tax Office Data," The Review of Economics and Statistics, MIT Press, vol. 96(3), pages 563-576, July.
    12. Erkko Autio & Kun Fu, 2015. "Economic and political institutions and entry into formal and informal entrepreneurship," Asia Pacific Journal of Management, Springer, vol. 32(1), pages 67-94, March.
    13. Sandra Sookram & Patrick Kent Watson, 2008. "Small-Business Participation in the Informal Sector of an Emerging Economy," Journal of Development Studies, Taylor & Francis Journals, vol. 44(10), pages 1531-1553.
    14. Sabine Bernabe, 2002. "Informal Employment in Countries in Transition: A conceptual framework," CASE Papers 056, Centre for Analysis of Social Exclusion, LSE.
    15. Klarita Gërxhani, 2007. "Explaining gender differences in tax evasion: the case of Tirana, Albania," Feminist Economics, Taylor & Francis Journals, vol. 13(2), pages 119-155.
    16. repec:ilo:ilowps:355196 is not listed on IDEAS

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