Modelling the Relationship Between Gdp Per Capita and the Informal Economy in Kenya: a Multiple Causes and Multiple Indicators Approach

Abstract

Alot of research around the informal sector examines it from the employment perspective, with a key problem being the di culty in estimating the true size of the informal sector. Other research focuses on studying this sector as it appears in urban settings; in this context, the challenges that they face as they conduct business are studied. However, their contribution to GDP is an ongoing knowledge gap, with various methods proposed to estimate the size of the sector and the contribution to GDP that it makes. Pursuing this line of thought will enable policy makers to change the narrative from only looking at its expansion in terms of employment, to quantifying its value to the economy, in order to investigate if current interventions such as group credit have made an impact on the production of this sector.