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Savings and the informal sector

Dobson, Stephen; Ramlogan-Dobson, Carlyn; Strobl, Eric


Stephen Dobson

Eric Strobl


© 2020 Informa UK Limited, trading as Taylor & Francis Group. In many countries the informal sector is a vital source of employment and income. But little is known about the impact of this sector on savings, which are crucial in promoting investment and growth. This paper finds an inverse relationship between savings rates and the informal sector when the informal sector is small. Once the informal sector reaches a certain size, further growth in the size of the informal sector boosts savings rates. The non-linear relationship is confirmed in both parametric and semi-parametric estimations. Rather than allowing the informal sector to grow unchecked, policy should focus on removing barriers for successful operation of business in the formal sector.


Dobson, S., Ramlogan-Dobson, C., & Strobl, E. (2020). Savings and the informal sector. International review of applied economics, 34(2), 217-234.

Journal Article Type Article
Acceptance Date Nov 15, 2019
Online Publication Date Jan 7, 2020
Publication Date Mar 3, 2020
Deposit Date May 9, 2022
Publicly Available Date May 13, 2022
Journal International Review of Applied Economics
Print ISSN 0269-2171
Publisher Routledge
Peer Reviewed Peer Reviewed
Volume 34
Issue 2
Pages 217-234
Keywords Informal sector; Savings rates; Semi parametric
Public URL


Accepted manuscript (1 Mb)

Copyright Statement
©2020 The authors. All rights reserved. No part of this publication may be reproduced without the written permission of the copyright holder

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