Poverty and Informal Economies

Abstract This article examines how the informal economy matters in the context of poverty and social inequality. It first presents a brief history of the concept and related theoretical perspectives and controversies before discussing the informal economic activities among the urban poor. In particular, it considers the informal economy between informal activities and the informal sector and describes three types of informal economies, along with their corresponding problems: the informal economy in the third world, to which corresponds a problem of development; the “second economy” in the Soviet Union, which complicates the question of the relationship between formal and informal; and the informal economy in contemporary Western societies. The article also explores what types of regulation emerge from informality and concludes with an assessment of methodological challenges and research priorities for the coming period of social science research on the urban poor.