The informal economy is ever-present in developing countries. It is present in any worker and small business out of the state’s regulatory environment. Moreover, high poverty rates are also present...Show moreThe informal economy is ever-present in developing countries. It is present in any worker and small business out of the state’s regulatory environment. Moreover, high poverty rates are also present in such developing countries. Therefore, finding a way to address the informal economy to see whether poverty can be reduced is paramount. Thus, this thesis will explore the research question of: What state interventions to the informal economy can affect the countries’ poverty rates across different levels of economic development? For this purpose, this research will explore two state interventions: those facilitating business formalization and those providing social protection. By analyzing over 100 countries and conducting a multiple linear regression, this research has found a statistical effect of state interventions on the countries’ poverty rates. The findings show that state interventions can affect the poverty rates of developing countries. However, such an effect is contingent on matters such as the level of corruption and government effectiveness. Thus, these findings pave the way for future focus on how the countries’ institutional environment must be addressed when looking into how to target the informal economy to reduce poverty.Show less
