<P> The most prevalent types of work in the informal economy are home - based workers and street vendors . Home - based workers are more numerous while street vendors are more visible . Combined, the two fields make up about 10--15% of the non-agricultural workforce in developing countries and over 5% of the workforce in developed countries . </P> <P> While participation in the informal sector can be stigmatized, many workers engage in informal ventures by choice, for either economic or non-economic reasons . Economic motivations include the ability to evade taxes, the freedom to circumvent regulations and licensing requirements, and the capacity to maintain certain government benefits . A study of informal workers in Costa Rica illustrated other economic reasons for staying in the informal sector, as well as non-economic factors . First, they felt they would earn more money through their informal sector work than at a job in the formal economy . Second, even if workers made less money, working in the informal sector offered them more independence, the chance to select their own hours, the opportunity to work outside and near friends, etc . While jobs in the formal economy might bring more security and regularity, or even pay better, the combination of monetary and psychological rewards from working in the informal sector proves appealing for many workers . </P> <P> The informal sector was historically recognized as an opposition to formal economy, meaning it included all income earning activities beyond legally regulated enterprises . However, this understanding is too inclusive and vague, and certain activities that could be included by that definition are not considered part of the informal economy . As the International Labour Organization defined the informal sector in 2002, the informal sector does not include the criminal economy . While production or employment arrangements in the informal economy may not be strictly legal, the sector produces and distributes legal goods and services . The criminal economy produces illegal goods and services . The informal economy also does not include the reproductive or care economy, which is made up of unpaid domestic work and care activities . The informal economy is part of the market economy, meaning it produces goods and services for sale and profit . Unpaid domestic work and care activities do not contribute to that, and as a result, are not a part of the informal economy . </P> <P> Governments have tried to regulate aspects of their economies for as long as surplus wealth has existed which is at least as early as Sumer . Yet no such regulation has ever been wholly enforceable . Archaeological and anthropological evidence strongly suggests that people of all societies regularly adjust their activity within economic systems in attempt to evade regulations . Therefore, if informal economic activity is that which goes unregulated in an otherwise regulated system then informal economies are as old as their formal counterparts, if not older . The term itself, however, is much more recent . The optimism of the modernization theory school of development had led most people in the 1950s and 1960s to believe that traditional forms of work and production would disappear as a result of economic progress in developing countries . As this optimism proved to be unfounded, scholars turned to study more closely what was then called the traditional sector . They found that the sector had not only persisted, but in fact expanded to encompass new developments . In accepting that these forms of productions were there to stay, scholars and some international organizations quickly took up the term informal sector (later known as the informal economy or just informality), which is credited to the British anthropologist Keith Hart in a 1971 study on Ghana published in 1973, and was coined by the International Labour Organization in a widely read study on Kenya in 1972 . </P>

Involvement of the government in the informal sector