How Economic Informality Constrains Demand for Programmatic Policy

Abstract

The majority of economic actors in the developing world participate in the informal sector, and yet little is known about the political implications of this constituency. I argue that, particularly in weak-state democracies, economic informality constrains the rise of programmatic politics. An uncertain, undocumented, and irregular economic relationship with the state conveys signals about the state that affect citizens’ demand for and ability to coordinate on programmatic policy. Novel survey evidence from urban Senegal illustrates that greater irregularity is associated with weaker perceptions of tax compliance, lower expectations of government, and weaker coordination capacity and that informality is associated with weaker programmatic demands. Experimentally providing information about a salutary fiscal policy causes some informal sector members to positively update expectations about government performance and electoral coordination capacity. Field experiments in two other African democracies increase confidence in the proposition that informality inhibits the formation of a constituency for programmatic politics.