Rational agent-based understanding of the informal sector: A critical assessment

Abstract

The main economic theories that have studied the informal sector have had little success in explaining the consistencies founded empirically and in proposing efficient policies to bring up to date the non-structured sector. This work proposes that more suitable theoretical analysis, which supports policies directed to encourage productivity in the informal sector, would emerge if new variables (such as institutional arrangements) were incorporated in the analysis and if some assumptions are modified – particularly those related to agent rationality – in the analysis of these social phenomenon.