Informal Emissions
Environmental regulations and their enforcement play a critical role in reducing emissions and their devastating effects on humanity and the environment. However, many developing countries have large informal sectors—accounting for more than 70 per...
| Main Authors: | , , , |
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| Language: | English English |
| Published: |
World Bank, Washington, DC
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/099425208312212101/IDU0f8fd577a0ab8a0429809bb90e96aaf4d0cd5 http://hdl.handle.net/10986/37946 |
| Summary: | Environmental regulations and their
enforcement play a critical role in reducing emissions and
their devastating effects on humanity and the environment.
However, many developing countries have large informal
sectors—accounting for more than 70 percent of total
employment, that operate outside government control. The
presence of the informal sector could have detrimental
consequences on the environment as informal firms do not
comply with regulations, which could jeopardize the
effectiveness of environmental policies. The paper uses
reduced form equations to estimate the relationship between
both CO2 and non-CO2 emissions per value added and the
informal sector measured as the share of informal workers in
total across countries. The estimates indicate that
emissions per value added in the informal sector are higher
as opposed to in the formal sector. At the sector level,
higher informality is associated with lower CO2 emissions
per value added only in manufacturing and other services
sectors. In particular, a one percentage point increase in
the share of informal workers in total sector employment
reduces the CO2 emissions per value added by 1.44 percent in
manufacturing and 1.773 percent in services. This implies
that the magnitude of emissions per value added in the
formal sector relative to the informal sector is ambiguous.
Sector-specific estimations for non-CO2 emissions yield
positive significant coefficients for agriculture, trade,
mining, and utilities and a negative significant coefficient
for manufacturing. |
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