Resurgence of informal economy in the US amidst of automation

Abstract

A continuous decline in the number of informal economies in the advanced economy has been boosted across the globe by various institutions such as IMF (International Monetary Fund). But a resurrection of the informal economy is being witnessed in the United States (US) with a 102% jump from 1990 to 2018. Over the years technological advancement has impacted the involvement of labour in the production process, with rapid automation in the last three decades this involvement has been reduced a to minimalistic level. In this paper, we tried to build a narrative to explain this resurgence of the informal market in the US. Through our theoretical framework, we commented on how unemployed graduates and the informal economy are associated with automation. The result showed that both variables were positively associated with automation which was confirmatory of the theory put forward. Lastly, we also comment on income inequality and automation which were also positively related.

Keywords

• informal economy
• automation
• gini coefficient
• unemployment
• technology change