Contribution of Informal Sector to Welfare and Employment
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Abstract
The informal sector plays a vital role in providing employment and improving people's welfare, especially in countries where the economic system has not been able to accommodate the entire workforce formally. This research aims to critically examine the contribution of the informal sector to job creation and community welfare through a qualitative literature review approach. By analyzing various academic literature and official reports, it is found that the informal sector serves as a socio-economic buffer in the face of structural pressures and economic crises. The sector has yet to receive adequate legitimacy and institutional support, which has resulted in its vulnerability to exploitation and income instability. The analysis also shows that the informal sector has the potential for economic transformation if supported by adaptive and contextualized policies. This research emphasizes the importance of repositioning the informal sector within a more inclusive and equitable economic development framework. The results of this research are expected to enrich public policy discourse and encourage policy formulation that is more participatory and responsive to the dynamics of the community economy.
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