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Practice Reading: Multiple Choice, Multiple Answers ID: #2865 Industrial sectors

Instructions ›

The original use of the term 'informal sector' is attributed to the economic development model put forward by W. Arthur Lewis, used to describe employment or livelihood generation primarily within the developing world. It was used to describe a type of employment that was viewed as falling outside of the modern industrial sector. An alternative definition uses job security as the measure of formality, defining participants in the informal economy as those "who do not have employment security, work security and social security". While both of these definitions imply a lack of choice or agency in involvement with the informal economy, participation may also be driven by a wish to avoid regulation or taxation. This may manifest as unreported employment, hidden from the state for tax, social security or labour law purposes, but legal in all other aspects. Edgar L. Feige has proposed a taxonomy for describing unobserved economies including the informal economy as being characterized by some form of non-compliant behavior with an institutional set of rules. Feige argues that circumvention of labor market regulations specifying minimum wages, working conditions, social security, and unemployment and disability benefits gives rise to an informal economy that deprives some workers of deserved benefits while conveying undeserved benefits to others.

The term is also useful in describing and accounting for forms of shelter or living arrangements that are similarly unlawful, unregulated, or not afforded protection of the state. 'Informal economy' is increasingly replacing 'informal sector' as the preferred descriptor for this activity.

Which of the following jobs would fall under the definition of "informal sector"?

* Click on the correct answers

An accountant working at a national firm A cleaner who only works when called by the hotel staff A grocery store clerk who gets paid in cash and is not reported in the tax statement by the store owner A part time teacher making the minimum teaching wage at a state school An engineer who's paid a salary after the deduction of tax by his employer A construction worker who gets paid what the supervisor feels right at the end of the job A nonprofit worker who had to sign a legal agreement in accordance with the labor market requirements

Result:

A.I. Explanation:

Option 1: "An accountant working at a national firm"
Explanation: This option is incorrect because the text describes the informal sector as employment that falls outside of the modern industrial sector, which typically includes jobs with formal contracts and benefits. An accountant at a national firm is likely to have job security and be part of the formal economy.
Option 2: "A cleaner who only works when called by the hotel staff"
Explanation: This option is correct as it aligns with the text's definition of the informal sector, where employment is characterized by a lack of job security and formal agreements. The cleaner's irregular work pattern suggests a lack of formal employment status.
Option 3: "A grocery store clerk who gets paid in cash and is not reported in the tax statement by the store owner"
Explanation: This option is correct because it exemplifies the informal sector as described in the text. The clerk's cash payment and lack of tax reporting indicate non-compliance with formal employment regulations, fitting the definition of the informal economy.
Option 4: "A part time teacher making the minimum teaching wage at a state school"
Explanation: This option is incorrect because a part-time teacher at a state school is likely to have formal employment status, including job security and compliance with labor regulations, which contradicts the characteristics of the informal sector.
Option 5: "An engineer who's paid a salary after the deduction of tax by his employer"
Explanation: This option is incorrect as it describes a formal employment situation. The engineer's salary being taxed indicates compliance with labor laws and regulations, which is not characteristic of the informal sector.
Option 6: "A construction worker who gets paid what the supervisor feels right at the end of the job"
Explanation: This option is correct because it reflects the informal sector's characteristics. The construction worker's payment method suggests a lack of formal agreements and job security, aligning with the text's description of informal employment.
Option 7: "A nonprofit worker who had to sign a legal agreement in accordance with the labor market requirements"
Explanation: This option is incorrect because signing a legal agreement indicates formal employment status and compliance with labor market regulations, which does not fit the definition of the informal sector.

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