CONTENTS Acknowledgements Foreword? 1: Globalization and informality in times of crisis 21 A. Labour markets in open developing economies 21 B. Key facts on globalization, trade and informal employment in developing countries 25 C, Improving social equity and efficiency by battling informality 37 2: Varieties of informality 39 A. Three views of the informal economy 39 B. A unifying model: multi-segmented labour markets 43 C. Definitions; making informality concepts operational 51 D. The crux of measurement 54 3: Openness to trade and informality 59 A. How does trade opening affect informal employment and wages? 59 B. What does the evidence tell us ? 67 4: Impact of informality on trade and growth 87 A. How does informality shape macroeconomic performance? 87 B. Informality and macroeconomic performance: empirical evidence 91 5: Economic resilience: dynamics of informality 101 A. Transmission mechanisms of shocks in informal labour markets 101 B. Informality and business cycles 104 C. Capital flows and informality 108 6: Globalization and informal employment: An empirical assessment 113 A. Setting the stage 113 B. The impact of globalization on informal employment 119 C. Does informal employment lock countries into trade patterns? 123 7: Robust policies for an uncertain world 127 A. normalization of firms 128 B. Supporting transitions from informal jobs to formal employment 134 C. Employment-friendly trade policies 140 D. Coherence between trade and labour market policy 143 References 149 Annex 1: Data description 163 A, Informality measures 163 B. Economic and social indicators used in the empirical analysis 169 Annex 2: Technical details to the empirical analysis 175 A. Methodological considerations 175 B. Detailed regression results 176 C. Robustness checks 177