• AEA in the news
  • December 27, 2016

Impact of Modi govt’s campaign against cash on informal economy

A street vendor selling flowers in Ho Chi Minh City, Vietnam, October 20, 2014.

Xuan Huongho/Bigstock

A 2014 article from the Journal of Economic Perspectives about regulation of the informal economy was cited in a Mint opinion column. In Informality and Development, authors Rafael La Porta and Andrei Shleifer explore the differences between formal firms and the informal firms that account for a large chunk of economic activity in developing countries. They find that informal firms are typically much less productive than established companies and pose little threat to them.