Legal and Social Norms for Development:Why legal reform of the informal economy failed to influence vulnerable groups in developing countries

• Using the concepts of social norms and social reality, this chapter explores why legal reforms that aimed to facilitate the formalization of informal workers have largely failed to influence vulnerable groups in developing countries. It explores the use of legal reforms in order to achieve development and poverty reduction. Using empirical material from a qualitative study conducted in Colombia among a group of internally displaced people engaged in small economic activities, as well as quantitative data from national statistical surveys, this chapter illustrates that there is an overestimation of the impact of legal norms in the decision of people to work in the informal economy. In contrast to the legalist approach supported by international organizations, such as the World Bank and the International Monetary Fund, this research confirm the thesis that social norms and informal institutions play a crucial role for this type of small entrepreneurs The case studied describes the situation of a group of victims of war in Colombia who were displaced from rural areas and were engaged in the informal economy upon arrival to the cities, most of them as street vendors, domestic workers, and small entrepreneurs. For this group, society accepted informality and built a number of reasons, arguments, and social norms to legitimize not following the law. Internally displaced persons were not worried by the formalities of the law and instead regarded the informal economy as a legitimate source of income.

Subject headings

SAMHÄLLSVETENSKAP  -- Juridik -- Juridik och samhälle (hsv//swe)

SOCIAL SCIENCES  -- Law -- Law and Society (hsv//eng)

Keyword

Institutions

Social Norms

Informal Economy

Internally Displaced Persons

Poverty Reduction

Doing Business Report

Going Against the Law.

Publication and Content Type

kap (subject category)

ref (subject category)