A matter of choice?

This chapter sets out to readdress the employment issue by looking at the various accounts on informality and their implications for social policy design. From a critical review of the main literature in informality, it seeks to integrate key insights from seminal work of Robinson (1936), Lewis (1954), and Furtado (1965), to the mainstream view on informality as perverse and parasitic behaviour. Informality in most of recent literature is perceived as costly, inefficient and harmful for economic growth. A critical assessment of such assumptions helps to organise the review on social protection responses, in the second part of the chapter. By doing so, the interrelations between labour market functioning and state regulation are revisited, with a focus on Latin American countries. Particular attention is given to conditional cash transfers, which have been portrayed as a 'revolution from the South'. A note on the erosion of social protection and the consequent narrowing of employment choices closes the chapter.