Open AccessMeasuring the informal economy in South Africa
Author(s) -
Stephen Graham Saunders,
Elsabé Loots
Publication year - 2015
Publication title -
suid-afrikaanse tydskrif vir ekonomiese en bestuurswetenskappe/south african journal of economic and management sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.277
H-Index - 17
eISSN - 2222-3436
pISSN - 1015-8812
DOI - 10.4102/sajems.v8i1.1286
Subject(s) - informal sector , economics , currency , economy , informal education , macroeconomics , economic growth , higher education
Measuring the size of the South African informal economy has received inadequate attention, making it difficult for policy-makers to assess the impact of policy measures to stimulate informal economic activity. This article aims to estimate the size of the informal economy by using the Currency Demand Approach. The empirical results reveal that the informal economy as a percentage of GDP decreased from 1967 to 1993, before levelling off. The growth in the informal econmy has also underperformed in comparison to formal economic growth. There appears to be a causal relationship running from the informal to the formal economy. Macro-economic policies aimed at the formal economy will not necessarily 'trickle down' to the informal, while these polcies aimed at the informal economy may have a profound effect on the formal economy