“…The informal economy is multi-faceted and a wide range of definitions and measures are required to capture its diverse activities. However, most existing – and widely used – cross-country estimates of informality suffer from large measurement problems, which reduce the reliability of existing empirical evidence on the extent and drivers of informality. …”

“…In doing so the paper focuses on the key channels through which different reforms influence short-term activity via the main components of demand and discusses how these channels operate under different macro conditions. …”

“…In terms of structural policies, this requires continuing to improve activation policies, such as training and job placement, re-skilling and up-skilling the unemployed, preventing youth from leaving the education system under-qualified and better on-the-job-training. …”

“…Conditioning on several country characteristics such as the size, stage of development and openness to trade as well as macroeconomic policies, the following findings for a panel of mostly OECD countries emerge: First, countries with stronger banking supervision and capital market development, better quality of governance, higher foreign reserves and several labour market characteristics such as higher unemployment benefits and greater spending in active labour market policies tend to experience less severe negative growth shocks (negative tail risk). …”