Microeconomic Analysis of the Informal Sector – Results of Sample Surveys

In earlier studies of the informal sector, and in particular in its association with small-scale, cottage and household manufacturing industries (HM), this sector was commonly considered as economically backward, low-income and offering few possibilities for raising productive employment. Later studies, by Allal and Chutta (1982) questioned this view , and noted, in addition, that informal activities are an important source of income and employment for a large portion of the population and will remain so over a long period to come and cannot be neglected , therefore, in t he design of development policies. The recognition of the importance of this sector has not removed two major obstacles in the investigation of the sector: data and viable analytical frameworks. Additional insight in the sector requires primary data collection of an unregistered population, and developing an analytical framework for studying settings with significant institutional influences. ll1is paper reports on the collection of primary data and on an analytical framework which were applied in a field survey of the informal sector in the context of urban areas in Pakistan