What is meant by the informal economy in urban settings?

The informal economy in urban settings refers to economic activities that are not regulated by the government, which includes businesses and services that operate without formal registration, permits, or compliance with laws regarding labor and taxation. This can encompass a wide range of activities, such as street vending, unregistered small businesses, and casual labor arrangements.

Such activities are typically characterized by a lack of job security, benefits, and protections for workers, which often leads to vulnerability for those involved. Because these transactions occur outside official economic systems, participants might not have access to legal contracts or social services.

In contrast to this, regulated financial markets involve formal economic activities that adhere to government-imposed regulations; tax-free transactions might occur within the informal economy, but they do not define it; and government-sponsored job programs specifically refer to formal employment opportunities that the government directly facilitates, which is the opposite of what the informal economy embodies.